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Secrets of International Trade

Analysis of Products for Export


Part 1

Part 2

Part 3



Only when the answers to these questions are satisfactory, should the would-be exporter proceed.

The exporter should ask himself a number of questions about the nature of his product and determine how exportable it is.

The types of questions
that should be asked are:

1. What are the features of our product that make it compare favorably with competitive products?
# In other words, why do your local customers like them?

2. How are the product used?
# Meaning that: Would it have the same use abroad in foreign countries?

3. What size, colors, design, etc., are preferred by the users?
# Would foreign buyers have the same attitude?

4. What modifications, if any, would be necessary?
# That is, to make the product more acceptable to foreign buyers?




5. Has the product been thoroughly tested and tried in the home market?
# Can you be sure of consistence high product quality?

6. What are the branding, packaging, and labeling requirements to sell the product abroad?
# How would the present branding, packaging and labeling be changed for exporting?

7. What are the technical specifications of the product? # Would they be acceptable in the target country?

8. What after-sales service, if any, would be required?
# How should it be provided?

9. Would the product meet foreign health and safety standard requirements?
# How do you meets foreign required standard?

10. What if the technology is changing fast?
# How can you maintain product superiority?

11. How do you keep ahead of the competition?
# How to think ahead and anticipate what your competitors intend to do?

12. Can you produce the quantities of product that may be required?
# There are no point in getting orders that productions can't keep-up.

13. Will you be able to maintain continuity of supply?
# Getting your productions to work over-time to match short-term demand are fine but can it be maintained?




Analysis of Export Pricing

Another research that would-be exporter should undertake, are the export price for the product.

Most foreign buyers prefer to be quoted an all-inclusive price, in their local currency or in US dollars, delivered to their warehouse, nearest port, airport, or city.

In other words, it is not enough for the would-be exporter to calculate an export F.O.B. or F.O.R. to his own local port of shipment.

He must calculate the price right through to the foreign country, an export price that is CIF, FOB or FOR called Incoterms known as Special International Trade Terms

The guiding principle in calculating an export price are to make sure that all possible costs are included using a Costing Sheet to ensure that no items have been overlooked.

The first item is the production cost. Here a decision must be made whether it includes both variable or direct and fixed costs-(overhead costs).

Some exporters, to help keep their export prices competitive, include little or no overhead cost, only the variable or direct cost of production. The cost of administrative overhead are absorbed into the price set for local sales.

The risk exists with this practice for your goods being sold abroad at less than the home country price are - there may be the imposition of an anti-dumping duty on your product.

In addition to all the various production, transportation, customs, marketing, marine insurance, exporter's profit margin and other costs that must be included in the final landed price.

Different foreign markets, if the exporter is considering different foreign markets, he would have to prepare different price quotations.

If the foreign market is very large, as with The EEC and CE Marking requirements he may need to have different prices for each region, taking into account varying transportation costs.

Some flexibility are important, the exporter may need to offer some discount to the foreign buyer for large orders or if the buyer are willing to pay cash or a higher price to take account into account for bank interest incurred when an importer agrees to pay a given sum of money at a stipulated date know as a time draft.

Once the exporter has calculated the final selling price for his product, he must compare this with the price charged by his competitors products.

Recommended further reading :
How to do Costing for Export?

Decision ahead of time by the exporter on the amount of credit, if any, to be given to the foreign buyers and how payment is to be made for example;
Sight draft drawn against an irrevocable letter of credit.

Recommended further reading :
Get Paid for Exporting


Part 1/3
How to conduct Export Research and how to select and Analyze Foreign Market?

Part 2/3 < This Page
Determine how exportable is your products?

Part 3/3
How to distribute your product in the foreign market?

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