Global Trade Practices
28/11/2001
Finding Your Partners for
DIRECT Exporting
World Trade Practices
Chapter 9
Sales Agent or Distributor
Issues
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Representation
Size of company
End-user contact
Accepts title of goods
Profit earned
Marketing activities
Customer support
Receivables risk
Inventory
Speed of delivery
Knowledge of import regulations
Termination aspects
Effective representation
Preferences of local market
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WTP-Chris Schrage
Travel or not???
Rule of thumb
– Some travel better than no travel
Travel allows opportunities
– To meet various potential
representatives
– Better understanding of market
potential
– Better view of research issues
– More objective view of market
feedback
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WTP-Chris Schrage
College of Business, University of Northern Iowa
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Global Trade Practices
28/11/2001
Finding customers w/research
Helpful indicators
Company size/scale
Product lines represented
Number of companies
representing
Industry focus
Technical knowledge
Level of experience
Sales volume
Sales structure
Key accounts
Professionalism
Customer support
Office locations
Product launch experience
references
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WTP-Chris Schrage
TOP TEN
ways to find a distributor or agent
Existing distributor or
agent lists
Networking
– Industry contacts
– Trade associations
U.S. Department of
Commerce
Local and state contacts
Catalog shows
Recommendations from
potential customers
Advertising
Kompass
Private databases
The internet
– State foreign offices
(JETRO)
– U.S. Chambers of
Commerce
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GlobalEdge
Everything International
Export Zone
GTN
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WTP-Chris Schrage
Tapping other resources
John P. Griffin from Ireland
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WTP-Chris Schrage
College of Business, University of Northern Iowa
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Global Trade Practices
28/11/2001
Griffin’s Quick Reference
Fundamentals
Profits for both parties
Real fight is for dealer selling time
All the dealer’s other lines are you
competitors
A distributor knows he may outgrow his
usefulness
The facts of life are tough but understood
by all
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Jon P. Griffin
WTP-Chris Schrage
Griffin’s Quick Reference
Analysis
A day in the field is worth a hundred at the desk
Learning really starts with selling
Territories can be quickly shuffled in priority
Intermediaries are shaped by their environment
Don’t depend on distributors for logic or reason
Intelligence is often no substitute for action
Data is certainly no substitute for an order, read
sparingly
If you want to know about the trenches- talk to the
troops
Only talk to troops that have been in trenches
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Jon P. Griffin
WTP-Chris Schrage
Griffin’s Quick Reference
Mechanisms
Channel choices
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Sole national exclusive
Multiple national product-exclusive
Multiple regional-exclusive
National distributor w/ regional subdistributors
– Commission agent
– Trading subsidiaries, partners, JVs
Jon P. Griffin
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WTP-Chris Schrage
College of Business, University of Northern Iowa
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Global Trade Practices
28/11/2001
Griffin’s Quick Reference
Key Questions
What are the customers needs and how do the
products compare?
Why triggers the customer to purchase?
How is an order generated?
When are the selling cycles and stocking needs?
Where do the customers shop right now?
Who? Poll customers to shortlist good dealers
Short cuts are tempting, but expensive in the long run.
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Jon P. Griffin
WTP-Chris Schrage
Griffin’s Quick Reference
Selection
Vultures are professional line-collectors
– All talk, no actions
Talkers are hard to resist when orders are needed
Treat distributors like murder suspects and crosscheck
data
Verification- internal and external audit
The first thing a dealer will buy is time
Distributors may want a franchise for the wrong reasons
Mistakes in selection are very expensive
In early market entry, small and hungry dealers are
desirable
Advantages of larger dealer cooperatives are often illusory11
Jon P. Griffin
WTP-Chris Schrage
Griffin’s Quick Reference
Contracting
The contract:
Initial distributor enthusiasm is purely a reflex
National emporia is dead
– Dealers today focus
Attracting dealers takes best selling skills
Never appear to deal from a position of
weakness
Dress the part
Prepare your pitch / pre-empt distributor
fears
Contracts are one of the most overrated
instruments of busines
Contracts are really only useful on termination
At least appear to be fair
Jon P. Griffin
Performance
Activities
Launching
Inventories
Personnel
Training
Information
Exclusivity
Territory
Product
Sub-distribution
Pricing
Payment
Returns
Period
Changes
Market development 12
WTP-Chris Schrage
College of Business, University of Northern Iowa
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Global Trade Practices
28/11/2001
Griffin’s Quick Reference
Initiation
After contract- high-voltage kickoff is vital
Deal isn’t closed until the action starts
Serve the best wine first and wean a dealer with success
Don’t give dealers bad habits with early concessions
Go for quality, not quantity, in supportive material
Invest some bucks efficiently announcing your existence
Creep up on competitors
Good training is a gift that steals a salesman’s heart
Harness the “key mole” in the dealership
Jon P. Griffin
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WTP-Chris Schrage
Griffin’s Quick Reference
Training
Good professional presentation skills
Key to a good presentation is to teach
Teaching is the vehicle for relationships
with dealer sales staff
Assess your audience, tune your
presentation and prepare defenses
Training should build full supplier
proficiency
Better training involves rehearsals and
field work
Jon P. Griffin
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WTP-Chris Schrage
Training Pyramid
(Sacred sequence for product presentation)
Introduction
(a pleasant warm-up)
General Industry Background
General Product Background
Specific Product
The Market
The Summary
Jon P. Griffin
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WTP-Chris Schrage
College of Business, University of Northern Iowa
5
Global Trade Practices
28/11/2001
Griffin’s Quick Reference
Motivating the Distributor
Never publish net distributor prices
Forget simplistic notions of price control
Make line a top profit earner
Incentives needed for extra effort
Upward pressure may galvanize selling
activity
Credit and payment are really opportunities,
not problems
Internal incentives give products the edge
Jon P. Griffin
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WTP-Chris Schrage
Griffin’s Quick Reference
Motivating the Customer
Don’t take distributors skills for
granted
Quality in promotions
Inform dealers of promotions in
advance
Do trial runs before all out program
Jon P. Griffin
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WTP-Chris Schrage
Griffin’s Quick Reference
Growing
Distribution networks will change
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Expand territories of proven distributors
Concentrating more dealers in the same territory
Allocating different products to specialized distributors
Upgrading to stronger distributors w/ more resources
As sales grow- so does access and control
Critical mass- enough sales to go it alone
Changes are dictated by ROI
Products change to match the market
Products evolve to meet opportunities
Jon P. Griffin
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WTP-Chris Schrage
College of Business, University of Northern Iowa
6
Global Trade Practices
28/11/2001
Griffin’s Quick Reference
And more besides
Other issues
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Currency rates
Treasury function in managing cash
Taxation and exposures
Subsidiary and branch operations
Regional inventory
Equity investment in distribution for data and control
Distributors see suppliers’ sales people as asset and
threat
Good international staff are flexible, autonomous hybrids
Fight home-office mistrust with communication
Jon P. Griffin
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WTP-Chris Schrage
Matchmakers
Industry Specific
“leg-work” completed by
organizers
Meetings arranged
– Appropriate ministries or
agencies
– U.S. offices in host
country
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Ambassador
Consulates
Minimal cost
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WTP-Chris Schrage
Meeting potential distributors
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WTP-Chris Schrage
College of Business, University of Northern Iowa
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