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"Some minor product modifications may be
necessary to capture a share of the market."

Product Strategy for Export

The export firm may find a foreign market for its existing product without the need on any kind of redesign. Very often, some minor modifications may be necessary to capture a share of the foreign market.

The modifications may be due to legal requirements, for example: product labeling regulations, weight and measures, language or may be dictated by the local culture or climate.

From the export point of view, a firm's product can be divided into three aspects:

1. The physical product itself.
2. The package in which the product is sold and the name.
3. The service that is provided together with the product.

1. The Physical Product
The existing products should be exposed in the foreign market to determine their reactions by sending samples to prospective Export agents, Export merchant, Import agent or distributors.
Recommended reference: Export Market Development

The size of the product may also be a consideration. For example, people in Asia are generally smaller, requiring smaller sizes in clothing and footwear.

Units of measurement also vary or food products will have to comply with health regulations and electrical products having to meet safety requirements.
 

 
 
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How to calculate Costing for Export?
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Climate often affects the design requirements: The ability to withstand extreme heat, cold, dryness and humidity.

Religion and other cultural differences may also determine whether the product is saleable in its present form or otherwise.

For example: branding your IT anti-spam software product Amor which mean "Love" in Spanish will present a different impression of your product selling them in Spanish speaking countries.

2. Product Package and Name checklist
The
package used to enclose the product for local market may not be suitable for export. Questions to be answered should include:


(a)
Does the product need extra protection from rough handling, or climatic extremes?

(b) Is the product easily recognizable and appealing to the foreign customer?

(c) Does the label conform to local regulations?

(d) Does the label clearly indicate the contents, even to persons who may be illiterate?

(e) Does the label need to be in a foreign language?

(f) Does the logo or brand name have another, perhaps undesirable meaning in the local language?

(g) Does the package need to be larger or smaller than the one sold locally? Perhaps local consumers can only afford to buy smaller quantities of it.

(h) Have the brand name and trademark been registered in the foreign country?

3. After-Sales Service
Many products such as food require little or no after-sales service.

However, machinery and equipment require a certain level of service which can determine whether the customer buys the product or someone else's. Usually, the best way to handle after-sales service is to let the distributor provide it.

 

Pricing Strategy for Export

The price charged for the export product, should cover all the various costs involved in producing and marketing it. Sometime, an exporter may be satisfied with just breaking even or even incurring a loss - with a view of getting established in a new market.

It is tempting to sell products at a price that covers only the variable costs of each unit sold to make some contribution to the fixed costs or factory overhead.

There is always the risk that the exporter can be accused of dumping its products abroad and are required to pay anti-dumping import duty.

An exporter should calculate and determine all the costs involved in selling its product in the foreign market, including:

1. Foreign agent's commission.
2. It's own required profit, and then quote a price on that basis.

Any pricing strategy must be flexible to take advantage of: special discounts for quantity purchases or special introductory prices.

Next page 4/5 - Pricing Checklist
Distribution Strategy, Distribution Checklist

Pages 1/5  2/5  3/5  4/5  This is page 3/5

 

 

 
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Recommended references related to Export Pricing
A key tasks of an exporter is to calculate the price that the foreign buyer has to pay for your products. How to do Costing for Export?

Most foreign buyers prefer to be quoted in their local currency or in US dollars. Analysis of Export Pricing

To
established in a new market, be satisfied with just breaking even or even incurring a loss. Pricing Strategy for Export

The cost-plus method of pricing ensures that you will be selling at a profit. Export Pricing Competitiveness

Pricing procedure for costing and export quotation Checklist of Export Pricing Strategy

Costing in your local currency and convert to foreign currency for export pricing of your products. Summary of Export Price Costing
 

 

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