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Introduction to Exporting to the US for Jordanian Firms

This guide provides an overview of developing an export plan for the US market. Topics include US market overview, market entry strategies, market research methodologies, and marketing communications for Jordanian firms aiming to expand into the US market. The guide also covers market feasibility, implementation plans, and addresses common questions.

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Introduction to Exporting to the US for Jordanian Firms

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  1. Introduction to Exporting to the US By Fred Levitan Emerging Markets Group

  2. Agenda • Introduction • Objective • US Market Overview • Market Research • Methodologies, Components, Tools/Resources • Market Entry Strategies/Options • Other Factors • Marketing Communications • Export Feasibility and Implementation Plan • Questions/Answers

  3. Objective To provide Jordanian firms with an introductory understanding of how to develop and implement a proactive export plan for the US market

  4. US Market Overview General Economic Indicators: • Population: 300 million • GDP: $14 trillion • Per Capita Income: $46,000 • Inflation: 4% • Unemployment: 5% • Imports $2 trillion; Exports $1.2 trillion

  5. Market Overview (2) Leading Trade Partners

  6. US Market Overview (3) State of the Economy: • Recessionary signs - .6% growth • Housing/credit crises – home prices plummeting • Layoffs – 80,000 over last 1-2 months • High energy and food costs • Weak dollar • Dropping interest rates • Export boom fueled by weak dollar • World’s largest economy

  7. US Market Overview (4) General Demographics And Trends • Gender: 49% Women; 51% Men • Median Age: 35 years old • Life Expectancy: 78 years old; Rank #42 • Graying population • Retiring baby boomers

  8. US Market: National, Regional, and Local Series of individual markets/regions:

  9. US Market: National, Regional, and Local (2) • New England: CT, ME, MA, NH, RI, VT • Mid-Atlantic: DE, MD, NJ, NY, PA, VA, WV • Southeast: AL, AR, FL, GA, LA, MS, NC, SC, TN • Midwest/Great Plains: IL, WI, MI, OH, KY, IN, MO, KS, MN, NE, ND, SD, MT, IA • Mountain: CO,ID, UT, WY • Southwest: AZ, NV, NM, OK, TX • Northwest: AK, OR, WA • West: CA, HI

  10. US Market: National, Regional, and Local (3) • Each region represents separate economy • Each has varied economic strengths • Shaped by larger population centers • Identifying core business activities and clusters important for developing plan

  11. Market Research Objective: To determine whether there is a market for the exporter’s product/service in the US Key Questions: • What is the size of the market? • Where in the US is my market? • If yes to #1, do I have to modify my market and how shall I accomplish that? • What is driving demand for my product/service? • How do I best access and satisfy that demand/market?

  12. Market Research (2) Components: • Market size ($ value/units) • Market projections (annual %) • Segments • Trends/Drivers • Distribution channels • Pricing • Competitors • Regulations (national, state, local laws) • Certifications (QC/QA, safety) • Voluntary versus mandatory

  13. Market Research (3) Methodologies: • Primary research is defined as information gathered through interaction with other people such as meetings/interviews, focus groups, and surveys via email, phone, etc • Secondary research is defined as information (hard copy or electronic-internet) gathered through literature, publications, broadcast media, and other non-human sources • Analysis and conclusions

  14. Market Research (4) Secondary Research: • Information gathered from magazine articles, market research reports, directories, trade associations, government statistics, financial reports, etc • Provides general information to answer essential questions

  15. Market Research (5) Examples of General Secondary Research Tools/Resources: • Lexis-Nexis • Factiva • Dialog • ReferenceUSA

  16. Market Research (6) Example of General Secondary Research Tools/Resources: • SRDS List of all publications by industry • Chain Store Guide: covers many industries • Database List of USA Importers/Buying Agents • Manufacturers directories by state (all 50 states) • Gourmet Food Brokers Directory

  17. Market Research (7) Examples of Specialized Secondary Tools/Resources: • Food: Baking and Snack, Beverage World, Candy Industry, Food Processing, Food Quality, Milling and Baking News, QSR, and Tea and Coffee Trade journal, Private Label • Packaging: Beauty Packaging, Brand Packaging, Food and Drug Packaging, Package Design, Packaging Digest, and Packaging World • Giftware: Giftware News, Gifts and Decorative Accessories, JCK, Modern Jeweler, and National Jeweler

  18. Market Research (8) Examples of Specialized Secondary Tools/Resources: • Furniture: Furniture Today, Casual Living, Home Accents Today • Stone: Architect, Stone World, Stone Business • Services: SourcingMag, Tourism Management, Medical Tourism • Cosmetics: Global Cosmetics Industry, Cosmetics and Toiletries, Soap and Cosmetics

  19. Market Research (9) Trade Associations • Provides advocacy, technical services, and research for members • Offers useful conferences and tradeshows • Serves as excellent source • Publishes membership directories • Start with Encyclopedia of Associations: National Organizations of the US

  20. Market Research (10) Examples of Trade Associations • Association for Dressings and Sauces, Institute of Food Technologists, Food Marketing Institute • Contract Packaging Association, Flexible Packaging Association, Institute of Packaging Professionals • Gift and Home Trade Association • Tile Council of North America, World Floor Covering Association • Personal Care Products Council

  21. Market Research (11) Advantages of Secondary Research: • Relatively easy • Many tools and sources • Information readily available • Provides good intellectual grounding and direction • Generates initial answers to key questions

  22. Market Research (12) Disadvantages of Secondary Research: • Produces information overload • Lacks precision • Presents credibility issues • Focuses more on big business • Becomes dated very quickly

  23. Market Research (13) Primary Research • Information gathered from human sources through interviews, focus groups, surveys, etc • Identify sources at publications, associations, manufacturers, distributors, government agencies, and even competitors • Use information from secondary sources as basis for getting missing details • More viable now with current technology (i.e., Skype, email, etc)

  24. Market Research (14) Primary Research • Interact with and build relationships • Establish credibility by sharing information • Confirm findings with several parties (3-5) • Develop through interpersonal skills

  25. Market Research (15) Advantages of Primary Research • Fills in missing pieces of information • Adds clarity • Validates findings • Provides realistic and current assessment

  26. Market Research (16) Disadvantages of Primary Research: • Time consuming and expensive • Challenging at times • Requires different type of research skills

  27. Market Research (17) Analysis and Conclusions • Evaluate findings to identify missing data • Compare information with current capabilities: • Many methods (SWOT, STEEPLE, Profiles, etc) • SWOT (Strengths, Weaknesses, Opportunities, Threat) analysis and competitor profiles extremely popular

  28. Market Research (18)-SWOT Analysis-

  29. Market Research (19) Competitor Profiles: • Concise summaries of key competitors • Obtain information from primary and secondary sources • Represents benchmark of what to expect • Shapes export plan and implementation

  30. Market Research (20) - Competitor Profiles -

  31. Market Research Case Study Overview: Medium sized German manufacturer of disinfection equipment wanted to enter US market Objective: Determine if there is a market Processes: • Secondary Research – Associations, publications, annual reports, government statistics, regulatory agencies, web sites • Primary Research – Customers, distributors, and competitors • Drafting and finalizing information • Conclusions/recommendations Outcome: Very limited market. Extensive education needed prior to launch of product

  32. Market Entry Strategies/Options Generally: • Devising the best approach to enter the market • Market research should shape decision • Due diligence is vital regardless of option

  33. Market Entry Strategies/Options (2) Direct Sales: Sales that are transacted directly with the end-user or consumer • Hire person in the US to act as the master importer/distributor • Deal directly with customers • Advantages: • Control over entire process • Retain higher profits • Disadvantages • Expensive • Not applicable or practical in many industries

  34. Market Entry Strategies/Options (3) Distributor/Representative: • Distributor is an entity that stocks, resells, and delivers goods to customers • Representative (manufacturers’ rep/agent) acts on behalf of manufacturer and sells products to customers • Does not take possession of goods • Commission sales

  35. Market Entry Strategies/Options (4) Distributor/Representative: • Advantages • Leverage existing marketing/sales relationships • Access key accounts • Assume responsibility of sales process • Disadvantages • Struggle to stay relevant • Manage complex relationships • Commit considerable time and money

  36. Market Entry Strategies/Options (5) OEM/Private Label Supply: • Produce for others under the latter’s brand name • Advantages: • Generates fast revenues • Remains consistent with outsourcing trends • Disadvantages: • Ends abruptly • Retains no equity

  37. Market Entry Strategies/Options (6) License: • Manufacture Under License (“MUL”) • Intellectual property basis • Upfront fees • Royalties • Consulting • Use of product/service • Fees • Advantages • Spreads risk • Builds presence and knowledge • Generates income • Disadvantages • Temporary measure • Requires plenty of trust

  38. Market Entry Strategies/Options (7) Joint Venture: • Two partners take equity investment in a new enterprise and share expenses and revenues • Advantages: • Spreads risks and responsibilities • Leverage other party’s expertise/contacts • Disadvantages: • Performs inconsistently • Dissolves in chaotic fashion

  39. Market Entry Case Study Overview: Small, family-owned Scottish maker of malt extract wanted to enter US baked goods market Objective: Determine if there is a market and how to enter Processes: • Secondary Research – Associations, publications, annual reports, government statistics, regulatory agencies, web sites • Primary Research – Customers, distributors, reps, competitors • Drafting and finalizing information • Conclusions/recommendations Outcome: Large and competitive market for malt extract that can best be served through reps and, later, distributors. Found rep/distributor

  40. Other Factors Incoterms: • Established by International Chamber of Commerce • Sets legal obligations regarding costs and risks pertaining to the delivery of goods between buyers and sellers • 13 in total: Most common are ex works, CIF, and FOB • Has impact on customs • CIF: Enables importer to deduct international freight and insurance

  41. Other Factors (2) Customs: • US-Jordan FTA provides for a 10-year phase-in • Confirm classification codes • Verify that goods eligible for duty-free entry • Merchandise Processing/Harbor Maintenance Fees • Food/beverage and related items governed by BTA rules (Register facilities with FDA and prior notice needed for each shipment)

  42. Other Factors (3) Customs (continued): • Entry • Handled by importer or broker • Exporter must provide commercial invoices that contain: • Classification codes for each item • Value • Country of origin – “Made in Jordan” • Itemized international freight and insurance costs • Marking

  43. Other Factors (4) Shipping/Logistics • Select freight forwarders with right expertise • Consider bonded warehouses duty deferral • Expect possible container availability and consolidation issues

  44. Other Factors (5) Insurance: • Cover possible shipping loss (Depends on terms) – Marine – Specific v. blanket policies • Cover receivables – Advisable for large retail accounts (i.e., Wal-Mart) • Product liability – Strict liability states

  45. Marketing Communications Brochures/Sales Materials: • Keep consistent with other materials • Same colors, logos, etc • Use American English • State in imperial units (not metric…) • Emphasize benefits/uniqueness of product • Present clear and brief message • Provide full contact details – email, fax, phone #, website, name of US partner/office

  46. Marketing Communications (2) Communications Styles: • Cultural differences abound • Not have to mimic but be prepared • Empathize with prospect • Be concise; • Be brief; and • Be knowledgeable • Be consistent • Follow-up aggressively

  47. Marketing Communications (3) Website – E-Marketing • Ensure consistency with other media • Provide right mix of information • Partner with other sites/share links • Consider internet marketing tools • Update regularly

  48. Marketing Communications (4) Advertising • Prepare to assist/support US partners • Consider after research and promotional materials completed • Select media that best addresses desired audience • Keep consistent message • Transmit clearly benefits/advantages • Measure by number of responses

  49. Marketing Communications (5) Tradeshows • Study prospectus to determine relevance • Ensure geographic scope – national v. regional • Look for attendee description • Check if competitors are exhibiting • Attend before exhibiting • Make appointments at ~2-3 months prior • Schedule meetings offsite in conjunction with event • Examples: Institute of Food Technologists’, Nat’l Restaurant Association, High Point, Pack Expo, Int’l Baking Industry Expo,

  50. Export Feasibility and Implementation Plan • Define tasks • Set realistic deadlines • Determine measurable results • Develop budget based on tasks/deadlines • Monitor periodically • Change as needed

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