Export market entry strategies
A market entry strategy maps out how to sell, deliver and distribute your products in another country. When you're exporting a service, the strategy defines ways of obtaining contracts and delivering them in that country.
Entering an export market
Methods of selling to foreign markets include the following:
Direct exports are when you market, sell and deliver your products directly to the client. In the case of services, you negotiate, contract and work directly with the client. By avoiding a middleman, you get a higher return on your investment, set lower prices and become more competitive. Furthermore, you have a direct relationship with your customers.
You could choose to export indirectly through an intermediary, such as a trading house, an agent, a representative or foreign distributor. Depending on the arrangement, they can do some of the leg work for you, but at a cost.
Partnerships and alliances
Choosing to form an alliance or partnership with a domestic or foreign company is another way to enter a foreign market. Partnering with a foreign company can provide the expertise, technology, capital or market access that you might not be able to afford on your own. Allying yourself with a Canadian company whose products or services complement your own can reduce costs through joint marketing efforts or the sharing of distribution channels.
Exporting includes a number of other market-entry mechanisms, such as aquisitions and investments, joint ventures, licensing agreements, and selling to foreign governments.
To learn more about entering a target market, contact the Trade Commissioner Service or see step number 6 of the Step-by-Step Guide to Exporting.
Types of export intermediaries
Choosing to sell in foreign markets through an intermediary could save you time and money. They come in several types:
Agents and representatives
An agent secures orders from foreign customers in exchange for a commission. A representative is a specialized agent who operates within a specific geographic area and who sells related lines of goods or services.
Both agents and representatives may be authorized to enter into contractual sales agreements with foreign customers on your behalf. Normally, you pay them a commission only when they sell your product or service.
Trading houses are domestic intermediaries that market your goods or services abroad. A full-service trading house can handle many aspects of exporting, such as market research, transportation, appointing distributors or agents, exhibiting at trade fairs, advertising and preparing documentation.
Unlike agents, distributors actually purchase your product or service and resell it to local customers. Often, they set the selling price, provide buyer financing and look after warranty and service needs. They also usually provide after-sales service in the foreign market.
For more information on intermediaries, including tips on how to choose one, see step number 6 of the Step-by-Step Guide to Exporting.