Direct exports, indirect exports, and partnerships and alliances are the three main categories under which traditional market entry strategies fall.
Direct exports
Market to and sell to the customer directly.
It has benefits since it enables you to establish cheaper prices and be more competitive, provides you with close touch with your clients, and offers a larger return on investment than selling through an agent or distributor. A Caribbean food company may sell its goods directly to US consumers, including corporations, hospitals, and schools. If no other arrangements are made, the manufacturer is in charge of shipment, payment collection, and product maintenance in this case.
However, since there is no foreign intermediary to use, there are drawbacks to direct exporting. As a result, it may take you longer to familiarize yourself with the market and your clients or customers longer to get to know you. Such familiarity is frequently crucial when conducting business abroad.
Indirect exports
To a middleman, such as a foreign distributor, you market and sell. The US distributor is a businessperson who buys products from an exporter (at a discount) and resells them for a profit. The product’s support and servicing are typically handled by the overseas distributor, absolving the manufacturer of these duties. The distributor often keeps a product inventory, and a sufficient supply of extra goods, and maintains sufficient facilities and staff for routine service operations. Distributors often deal with a variety of complimentary but non-competing items. However, end users frequently purchase from stores rather than distributors.
A Caribbean food manufacturer may also sell directly to a US retailer, albeit in such deals, just a few product lines are typically available. Although results may also be obtained through mailing catalogs, pamphlets, or other information, this strategy mostly relies on traveling salespeople who speak directly with overseas stores. The direct mail strategy provides the advantages of doing away with commissions, saving on travel costs, and reaching a larger audience.
You can even hire a foreign agent or representative, even if they don’t buy the products. To demonstrate the product to potential customers, the salesperson uses samples and product documentation from the company. A representative often manages several non-conflicting, complementary lines. The sales representative is typically employed on a commission basis, under contract for a predetermined amount of time, and bears no risk or responsibility (renewable by mutual agreement).
Using an agent or distributor
Businesses that want to use distribution, franchising, and agency agreements must make sure that the contracts they set up are compliant with US legislation. Additionally, prospective exporters should be aware that such agreements could be governed by both federal regulations and specific state laws. For instance, operating a franchise in the US involves abiding by a plethora of rules, such as federal and state laws governing pre-sale information, state laws managing franchise registration, and federal and state laws governing the connection between franchisors and franchisees.
Partnerships/alliances
A partnership at home or abroad is another choice, as is creating a business presence in the target market abroad (FDI).
The following are some ways that a well-structured partnership can be advantageous to both parties: Your partner can complement your skills and offer the knowledge, perceptions, and connections that could be the difference between success and failure. Every business focuses on what it does best. The danger is shared by both partners.
To stay up with change and tackle multiple markets at once, you can also share ideas and resources in a partnership. Your partner could be able to offer you access to markets, finance, or technology that you might not be able to afford on your own. Alliances with a strategic purpose can be quite profitable. Creating a partnership with a business that offers a complementary good or service to your own is one of the simplest methods to export. Afterward, you can save money by utilizing the distribution and marketing know-how of the other company.
Some producers could decide not to build up a production center abroad, in which case setting up a marketing office in the US or getting into a licensing deal with a US company to manufacture your product might be taken into account. A marketing office can import the parent company’s product and serve as the primary developer of all sales-related activities if the exporter has made a commitment to the market and anticipates significant business activity in the US.
