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Topic 3: The Export Marketing Mix

 
Introduction: The Four "P"s of Marketing
Product Basics
Pricing Basics
Placement (Distribution) Basics
Promotion Basics
Market Segmentation, Targeting & Positioning
Introduction: The Four "P"s of Marketing
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This section examines the marketing mix, or the “Four P’s” of marketing: Product, Price, Placement and Promotion.

Once a company has researched an export market, it needs to consider the marketing mix for its products. The marketing mix is the set of choices a company offers to its target markets. It is a tool that can be adjusted to meet each customer’s or country’s needs.

An effective marketing mix also includes market segmentation, targeting and positioning the product for competitive advantage. These marketing concepts are outlined toward the end of the section. Proper execution of these procedures requires quality research and consultation from export assistance providers, export service providers and customers in the foreign market.

The Marketing Mix

The Marketing mix and the 4 P’s are the controllable elements of business. In other words, a company has control over what product it makes, what price it sells the product for, how it wishes to place (distribute) the product and how it wishes to promote it.

A company may need to adjust its marketing mix for each individual market due to the uncontrollable elements. Uncontrollable elements include geography, infrastructure, culture, technology, politics, laws and competition.

The 4 P’s and the 4 C’s: the Importer’s Perspective

An importer is most concerned about the 4C’s: Customer solution, customer Cost, Convenience and Communication. The 4 C’s emphasize customer needs and wants over just trying to sell products. Below is a comparison of the 4 P’s and the 4 C’s from the importer’s perspective.

  • Product as “Customer Solution”
  • Price as “Customer Cost”
  • Place as “Convenience”
  • Promotion as “Communication”

The exporter’s goal is to sell a product; the importer’s goal is to provide a solution for his/her customers. For either party to succeed, both must consider the total cost of shipping, insurance, customs clearance, duties, delivery fees and their own costs of business. Importers want the product to be handled, shipped and delivered to them as conveniently as possible. An importer also desires good communication in regards to product availability, transit times, problem-solving and marketing support.

Product Basics
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Each product contains a set of attributes. Included in the attributes is customer service, which is used to support business relationships. Although the sale is about the product, purchase decisions are also based on your ability to add value to the transaction. Exporters who are reliable, supportive, helpful in financing promotional materials and activities and good communicators often add to the company’s export success.

Stressing a product’s comparative advantage is essential to make a sale. With so many products to choose from, you must convince a buyer why yours is the best. Is your product healthy, nutritious, organic, shelf-stable, ready-to-eat, high in protein, low in carbohydrates, or great for dipping in sauce? Emphasize features as selling points.

Next, consider if any changes should be made to the product before selling internationally. Are any label modifications required? Are the product packaging, size, color and name of the product appropriate? Considering these and other attributes are essential to positioning your product in a market.

Product analysis includes:

  • Quality
  • Features
  • Brand Name
  • Packaging
  • Labeling
  • Product Assortment
  • Product Length & Depth

Quality

Quality is the most important feature of a product, and is defined by the customer. Promoting and communicating product quality is imperative. An exporter often needs to educate the buyer and the market about a product’s inherent quality.

Features

Food features differ from other product categories. Ingredients make up a food and can be an area of competitive advantage. The way food is processed is also an important feature. A manufacturer’s care, creativity and technical skills can make up other important product features.

Brand Name

Successful branding of a product is a distinctive marketing skill. Branding includes creating, maintaining, protecting and enhancing the identity of a good to differentiate against the competition. A product’s brand is a combination of symbolic design, name, term or sign that gives the product a unique position within the market. The brand often influences customer perception and purchasing decisions.

A product’s name is also important. An exporter must consider whether the name makes sense, is offensive or means something entirely different when translated. American exporters are not the only people who face this challenge. Consider the following products that have had difficulty in the U.S. market:

  • Mental: French mints
  • Plopp: Czech Republic candy bar
  • Crapai: Turkish dill pickles
  • Belcher’s Square Sausage: Scottish sausage
  • Fart: Polish candy bar
  • Bra: Swedish yogurt
  • Cream Collon: Japanese cookie

Packaging

A product’s design and container or wrapper is its packaging. Packaging is closely connected with the design and style of the product. An importer understands the packaging’s importance, and might choose one product over another based upon it. A trade event in Singapore involved a tabletop display of over 60 U.S. food products and hosted buyers from a variety of chains and wholesalers within Southeast Asia. The primary research conducted at the event sent a clear message to these exporters. Although many products themselves were tasty, attractive and interesting, the packaging oftentimes left a lot to be desired. Most packages were considered to be designed poorly or could not withstand the long journey to Southeast Asia.

Packaging needs to be both attractive and durable. An exporter should also consider packing options, which better protect the product and the product’s packaging.

Labeling

Proper labeling is both a science and an art. Labels contain several key components. First, the design and artwork of the package is oftentimes part of the label. Label information should include: brand and product name, the origin and date of manufacture, a list of contents and ingredients, applicable nutritional and health claims, as well as proper use and shelf life.

Many countries have very specific labeling regulations, which are detailed in the USDA, Foreign Agricultural Service's FAIRS reports. The importer should provide a final consultation and label input, as he/she is the one who is subject to appropriate labeling and customs clearance.

Label modifications can be expensive. However, there are programs to help. The Branded Program supports the expense involved in labeling changes to comply with import regulations.

Private Labeling

Private label is a brand created by a store or re-seller of another company’s products. Private labeling in the international retail food industry has continued to grow in the past decade and shows particular success in certain categories and countries. Private label products have become competitive with brands, due to their lower cost and perhaps better shelf space allocation.

Many manufacturers have created their own private label for different market segments using essentially the same product as the branded options. Private labeling has grown into its own industry with its own trade events. Some trade shows are exclusively for private label products. In addition, Food Export-Midwest and Food Export-Northeast arrange Buyers Missions each year for private label products.

Product Assortment

Most small and medium-sized companies have some consistency in their assortment of products. This means that they do not stray very far away from their core competency, such as making sauces, condiments or salad dressings. These products are grouped closely together in the same subheading in the harmonized system.

This is a benefit, as many buyers are interested in working with a firm that specializes in certain types of products. Many buyers believe that a small company sacrifices quality if their product line is too large. It is good to have product mix consistency, which is to say, not too wide of an assortment of products to market.

Length & Depth

Product length and depth are important considerations in product assortment. Moderate length strengthens export opportunities, as it often refers to available product flavors. For example, having twelve flavors of margarita mixes allows a potential buyer to make choices on which products they are interested in distributing. In international trade, providing choices allows for customers to try new flavors or stay with the ones they are already familiar with.

The number of versions available for a product is referred to as product line depth. Product depth usually refers to the different sizes a product is available in. Many countries prefer small product sizes due to limited store shelf space and smaller storage spaces in customer homes. Appropriate portion sizes also differ among countries, especially when compared to the U.S. During a retail store tour in the U.S., an international buyer referred to a 32 oz. bottle of soda as “family size.”

Pricing Basics
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Firms relatively new to exporting should aim to keep their pricing simple. What is commonly referred to as the cost-plus method of pricing may not be too different than how a company prices their products domestically. In fact, domestic pricing for many companies that have been in business some time include discounts, commissions, broker fees and other allowances that are more complicated than export pricing. Try to be as competitive as possible to gain market share, and remember that the importer has a variety of costs to deal with that you do not.

Experienced importers have a good idea about what the market price for a product should be and will let you know what is required to establish distribution. If they ask for pricing considerations from you, it often does not mean your price is too high, but that their cost is too high. If both you and the importer agree that the business has potential, there are ways to deal with the price escalation of export. If your pricing cannot match the importer’s needs or the market conditions, then continue trying other importers in other markets. Each transaction will provide a valuable lesson in export pricing.

Pricing Variables

  • Export Price Escalation
  • Discounts
  • Payment Period
  • Payment Terms
  • Use of the Pro forma Invoice

Export Price Escalation

Export pricing from your facility to the ultimate destination is usually segmented into three main parts:

Shipping within the United States to the port of export. This is commonly referred to as inland transportation or “pre main-carriage” transport. The further your facility is from the port of export, the more expensive shipping becomes.

Shipping from the port of export to the port of import. This is also referred to as “main carriage” and is usually listed as the origin and destination on the shipping documents. The main carriage is usually the longest leg of the journey, although there are exceptions.

Shipping from the port of import to the ultimate destination. This is referred to as “post main-carriage” and involves the expenses of getting a product from the port to the importer’s warehouse or end use location.

Every step requires organization, documentation and a logistical plan. Each function may vary between country of destination and type of buyer. As mentioned previously there are service providers that specialize in the process, such as international freight forwarders, consolidators, customs brokers and shipping companies.

Discounts

As price escalation between your warehouse and the ultimate destination can cost the importer more than the domestic buyer, the importer may request some form of discount off of your regular price. Many considerations go into discounting sales. However, the worth of the sale to the company in terms of volume, value, profit and long-term business should all be taken into consideration. Discount options could include:

Cash discount: Many businesses offer cash discounts to their customers in order to fuel demand of the products over a given period of time. Another type of discount could be offered for early payments, such as one percent per week prior to the invoice coming due.

Quantity discount: This is often used in the export business, and reduces price based on volume. For example, an exporter offers a product for $17.00 per carton of 12 boxes of product, under 100 boxes. The price could be reduced to $16.00 for amounts between 101-499 boxes; $15.00 for amounts between 500-999 and so on. It gives the importer an incentive to purchase more and increases sales for the seller.

Seasonal discount: Many foods and ingredients are produced in seasonal cycles. Sometimes, it makes sense to offer an off-season discount to the importer to make sure products move in the periods when consumption might be down.

An allowance might also be considered. An allowance may be promotional support for distributors or retailers who specially feature your products. The Branded Program provides cost sharing in many types of promotional activities, and is of great benefit to many small businesses in developing export markets for their products.

Payment Period

Export payments may usually take longer than the domestic equivalent sale. As a result, prices should be designed to recover the cost of capital during a lengthy open account sale. For example, if it would cost a company $300.00 to finance an open account sale of 90 days, it is a good idea to include that cost in the pricing to absorb the loss. If the importer agrees to pay 50% of the invoice in advance, you could reduce the equivalent amount of the cost of financing.

Payment Terms

If open account sales are not an option for one or both parties, the use of a consignment controlled payment is an option. This payment method is also referred to as payment by documentary collection, or draft, either at sight or on a time basis. It restricts access of the commercial documents prepared for the shipment, which are required to take title of the goods at the destination. The documents are only released to the buyer when payment has been made (sight draft) or when an endorsement of the draft obligates them to make payment within a given time frame (time draft).

Letters of Credit (which also make use of a draft), documentary collections (payment by draft only) and cash against documents help protect both the seller and the buyer in the transaction as their banks become directly involved. When using these methods a variety of banking fees must be paid by both parties. Many exporters include those fees in their price to absorb the costs of financing the exports.

Use of the Pro forma Invoice

Most export prices are quoted via the use of a pro forma invoice, which is essentially a quotation to the buyer for a particular shipment. In actuality, it becomes the first draft of the commercial invoice, the key document in the export business. Many importers request pro forma invoices on a consistent basis, and most successful exporters have become skilled at issuing them.

The Pro forma invoice includes information about the product’s value, metric weight and dimensions, costs for inland transport, main carriage and insurance, if requested by the importer. International freight forwarders and other shipping companies can provide advice on export pricing and rates for these services. Some countries require the pro forma invoice for the issuance of import permits and financing at the destination, which makes them formal and non-negotiable once accepted. For a sample pro forma invoice, click to view the document.

Placement (Distribution) Basics
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Export distribution can be broken into three steps. During the first step, products leave the factory or pick-up location and are taken to the port of export. Next, the shipment leaves the port of export and arrives at the port of import. Finally, the product moves from the port of import to the ultimate destination for storage, sale or use. More than one service provider is usually required to perform all of these functions, and because of the distance, paperwork and cost it is very important for all of these functions to work together in a seamless fashion, at least from the eye of the exporter and importer.

Placement Considerations

  • Distribution Channels
  • Indirect vs. Direct Exporting – Who Owns the Goods?
  • Exporting Logistics
  • Intermodal Transportation
  • Consolidations
  • Exclusive Distribution
  • Export Diversion

Distribution Channels

Channels of distribution vary greatly from one market to the next. For example, distribution channels in Japan are vastly different from those in Mexico or India. One of the major considerations of distribution concerns the length of the channel. The length of a channel refers to the number of intermediaries in the chain, all of whom are seeking a profit. The longer the channel, the more expensive the product is at the retail level. Thus, a shorter channel costs less and delivers the goods to market more quickly.

Indirect vs. Direct Exporting: Who Owns the Goods?

Many U.S. companies specialize in exporting products for others and do not produce any goods themselves. These companies may be called: Export Management Companies, Export Trading Companies, Export Merchants or Buying Offices from overseas firms. Regardless of the name, if you sell to another firm and they export your product, you are exporting indirectly, as you have given up title to the goods. Indirect exporting is a common way for small and medium-sized businesses to enter into foreign markets, as it requires little in the way of capital, time and staff compared to exporting directly. After some time and experience in the field of international trade, many companies begin to develop their own export business, often in other markets than the ones served by the exporting company.

In direct exporting, a company retains title to the goods until it is transferred to the buyer. Direct exporting involves setting up your own export operations and requires a long-term commitment, direct contact with buyers and increased cost and risk. However, it gives a company greater control over their export marketing. In addition, it is often more profitable than indirect exporting as at least one level of distribution is eliminated and the final cost of goods is lowered.

Exporting Logistics

Logistics includes all of the activities in moving merchandise from the origin of manufacture to the point of use or consumption. Export logistics include getting the right amount of product to customers within the required time frame at a cost that leaves a margin of profit for both parties. Recent estimates indicate that logistics in trade account for 15% of the total volume, or $1.5 trillion annually. Therefore, controlling logistical costs should be a priority and can result in more profit for the exporter.

Physical distribution has evolved in recent years and has become a competitive advantage for U.S. Exporters. Many firms refer to their distribution systems as “marketing logistics” instead of just “shipping.”

Importers are more concerned about the landed cost of a product than of the individual product price. An exporter’s ability to provide logistical solutions to help lower the landed cost influences that company’s ability to be competitive.

While it is important to remain cost-competitive, choosing transportation on price alone is not advised. The cheapest method of transportation is usually not the best, and it is often risky to save a few cents by selecting an unknown logistics service provider or carrier. If goods are misrouted, lost or not properly serviced, future business could be lost. A savvy exporter will look for savings at each step beginning with the method of packing goods for shipment and ending at product delivery, without sacrificing the quality of shipment. When an exporter can add value to the transaction, he/she always should.

Intermodal Transportation

Many exports are shipped by intermodal transport, which is the use of two or more modes of transport between origin and destination. The further a product has to be shipped, the more likely it will require intermodal transportation. Many shipments are picked up by local trucking firm, transferred to another truck for the interstate haul, loaded onto a container at a port and then loaded onto a vessel for export. After arriving at the port of import, the shipment may then be offloaded onto a train, a truck or another vessel prior to its arrival at the ultimate destination.

When choosing a transportation mode for products, the buyer’s needs should be weighed. Transit time, level of service, availability of choices and cost are all considerations which factor into a decision. Air cargo can be expensive, but the goods arrive within days rather than weeks. Live, fresh, chilled or frozen products with high value often warrant the extra cost of transportation. However, if the value is lower and there is not an urgent need for the product, then ocean freight would be a likely choice. In other markets, such as Canada and Mexico, truck or rail may be a suitable option.

Consolidations

Many food importers consolidate their shipments, which means that they request the exporter to deliver the shipment to the warehouse of a freight forwarder, NVOCC (non-vessel operating common carrier), or other consolidator. This company then builds a consolidation of multiple suppliers’ products into an air or ocean container and ships it to the port of import. By consolidating, the importer saves in freight charges, customs clearance fees and protects the integrity of shipments by having everything arrive in one lot rather than in partial shipments.

Even if the importer does not request consolidations, consider using a consolidator for your exports if they are less than a container load. In some cases, the buyer may not have enough orders to have their own consolidation and may ask you to include your shipment into a consolidation which arrives at port with multiple other importers’ products.

Exclusive Distribution It can work to the benefit of both the buyer and seller to enter into an exclusive distribution agreement. If an importer is truly excited about marketing a product in their country, they will often request the legal right to be the only one to do so. For an exporter, giving exclusive rights to the right partner can give his/her brand the best chance of gaining identity and market share.

Make sure the potential distributor has the proper network, sales support, promotional capabilities and customer base. If this cannot be determined, then a decision should not be made until sufficient information is gathered. Granting exclusive rights to an unqualified or unmotivated distributor can severely hinder your efforts in a market.

One key consideration regarding exclusivity is coverage. In some countries, most of the market may be within the coverage area of one distributor. In places like Canada, Mexico or Australia, there are multiple markets that are geographically spread apart and adequate coverage might not be possible with one partner. In these countries, you might choose more than one distributor and limit the exclusivity to a certain territory that can be properly managed by each one.

Export Diversion

Despite the channel, mode of distribution or type of distributor you work with, your exports could be compromised by diversion. Simply put, diversion occurs when your shipments do not reach the stated destination and are sent elsewhere without your knowledge. Diversion usually occurs when you have negotiated a special export price, based on the fact you are free from most domestic equivalent costs like commissions, broker fees and rebates. The goods are picked up from your facility on behalf of the buyer, who then resells them to another U.S. customer and they are in turn sold below your domestic price.

Protect yourself with a written agreement forbidding the buyer from diverting product from the intended destination and placing destination control statements on your commercial documents, cartons, or other packaging. If goods leave the country and are returned and sold without your knowledge, or never leave the country at all, it becomes an illegal transaction based upon your written agreement and destination control statements. To further prevent diversion and other unethical practices, check a buyer’s credibility through bank and trade references before conducting business.

Example of a Destination Control Statement:

"These commodities were exported from the United States in accordance with the export administration regulations for the ultimate destination of the United Arab Emirates. Diversion contrary to U.S. law is prohibited."

Promotion Basics
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Promotions explain the merits of a product and its company and are oftentimes referred to as communications. Products that require significant promotion in the U.S. may find a similar need in international markets.

Promotion Variables

  • Advertising
  • Sales promotion
  • Public relations
  • Personal selling
  • Direct marketing
  • Website for Export – “E-Marketing”

Together, these elements make up the promotional mix. In the export business, a company may find that one or more components of the promotional mix may vary in effectiveness based on the market, the buyer or the product being sold. When used at the same time, they are collectively known as “Integrated Marketing Communications", or IMC. It is helpful to take advantage of as many promotions as possible to grow a brand overseas. If a company does not have direct overseas communications, it should work with the importer to establish effective promotions.

Advertising

Advertising is known as any paid form of non-personal presentation and promotion of goods. While a small business exporter might not ever get involved in advertising internationally, the opportunity to do so is increasing with new media and lower costs in specific targeted markets.

If the proper opportunity to advertise does occur, it should be considered. In many cases advertising can be used to find potential distributors. Some targeted magazines are distributed overseas by federal government agencies for the purpose of bringing exported products to a market.

It is possible to maintain your domestic theme in international advertisements, and in some cases, preferred by the importer as well. It is imperative to have the message translated properly though, if the destination market does not use English, and in some cases even if it does use English. Interpretation of the message is most important, especially as most advertising has a humorous angle, and humor is often the most difficult aspect of language to interpret.

Examples of creative international advertising include:

  • A popcorn company targeted children by advertising their products alongside a new children’s movie. Placemats were made for restaurants that had fun and games for the children with popcorn and movie images.
  • A honey company hired a local in Greece to paint its car with the company’s logo and information. Their products were promoted all over town at a minimal cost.
  • One innovative company used product placement in key British soap operas to get their products into the living rooms of consumers. Their products could be seen in these fictitious supermarkets and convenience stores throughout prime time viewing hours.

Sales Promotions

Sales promotions are described as short-term incentives that encourage the purchase of a product within a given time frame. The use of coupons, cents-off, contests, premiums and other deals may be restricted in overseas markets, and are not nearly as common as they are in the United States. However, promotions can be a strategy used by your importer, who owns the goods and can decide how and when to promote a product.

Many promotions are designed to stimulate immediate sales. Some effective methods include: tastings, samplings and other similar events. Export assistance providers are often involved in overseas food promotional events, which may also qualify for Branded cost sharing.

Many international sales promotions can be found in grocery stores. In-store demonstrations with product giveaways and cooking demonstrations are popular along with end-of-aisle gondolas that highlight new products. Some companies even give away recipe cards as an incentive to buy the product if it’s an item consumers may not be familiar with.

Public Relations (PR)

Public Relations are based on obtaining favorable publicity and building up a good image as a “corporate citizen.” Public relations often make more of an impact than advertising. This is in part because they are true and believable. They are also an effective and economical way to create awareness about your products, your company and in some cases, yourself. Many small and medium-sized companies have effective public relations in place, even if that is not how they refer to them.

For example, many small farms, ranches, dairies and breweries have tours available for groups interested in learning about the operations. They also have shops on-site which sell their food products and other gift items such as hats, glasses, aprons and so on. Gift items often become a form of subtle advertisement. Many other firms donate proceeds to various charities, are involved in environmental issues, support local sports teams and provide food to the homeless and poor. These all make an impression on buyers as well as their customers. Displaying PR projects on a company website is a great way to develop a positive public image.

Personal Selling

Personal selling can pose a challenge with international customers. Cold calling distributor lists is less efficient than a properly set meeting such as a Buyers Mission, Trade Mission or meeting at a domestic or overseas trade show. However, it is important to note that many importers listed in the marketing reports outlined in Section 2 are aware they have been included in those reports and have requested to be included in order to be introduced to new suppliers. Food Export-Midwest and Food Export-Northeast also offer an online product catalog that has been customized to match buyer needs with registered companies’ products. Click here to learn more about the Online Product Catalog.

Personal selling is subject to “Culture’s Consequences.” In the U.S., we are used to being approached by strangers who would like to sell a product or service. But, in many countries this is not common or acceptable. Many cultures have distinctly different approaches to doing business, including both verbal and non-verbal communications, negotiations, thinking and decision-making processes. Before meeting with a potential buyer, learn about various business cultures of that country. Prepare yourself in advance by becoming familiar with their habits, as you can bet they are prepared to deal with U.S. businesses. And finally, try not to sell. Instead, focus on establishing a relationship and communicating why it makes sense for you to do business together.

Direct Marketing

Direct marketing involves carefully targeting existing or potential customers by a variety of media including telephone, fax, e-mail, the internet or direct mailing in order to cultivate or maintain business relationships. It is difficult in the export trade, as it is not directly aimed at consumers, but at businesses. Direct marketing is most effective if you have actually met with or communicated with the targeted business before. It is also used to introduce yourself and your company or to create awareness about your products and international trade intentions.

Continued communications with those you have met at a buyers’ mission, trade show, through a trade lead or even via your website can demonstrate commitment and create a good impression. Information on new products and recipes, market developments, a booth or attendance at a trade event, or even moving to a new location could spark an interest in the buyer, and often might put your company in the right place at the right time.

Websites for Export – E-Marketing

Internet advancements have given small and medium-sized firms a boost and have allowed many to expand their business internationally. Many of the promotional concepts presented in this section can be achieved through a carefully designed website. E-Marketing can provide a low cost implementation of an export strategy.

It is highly recommended that your website includes an international section where potential importers can learn about your products and your company. Many food importers have indicated that they often try and locate new suppliers via the internet, but are puzzled at the lack of mention of trade opportunities, and refrain from contact in order to focus on firms who indicate direct experience or interest in exporting.

A clearly defined mention of “International Inquiries Welcome” along with a specially designated area to describe your exporting policies and procedures and a pricing list for export gives your company a competitive advantage. Companies can also incorporate their own trade lead form to collect buyer data and interests. Literally hundreds of food and agricultural product firms are establishing export business through their websites today; so if your company is not yet doing so, you should consider adding yours to that proactive group.

Market Segmentation, Targeting & Positioning
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Once your top markets have been identified through market research, each market should be segmented, targeted and positioned properly for overall export success. This process helps a company to focus on those clients or market segments that offer the most potential, rather than using a de-segmented marketing approach.

Market segmentation, target marketing and market positioning are integral components to a successful marketing plan. Market segmentation involves separating markets into distinct groups with defined needs, wants and demands. Target marketing requires the firm to rank and select target segments based upon overall sales potential. Market positioning involves communicating a consistent message about your products in order to differentiate them from those of the competition.

Market Segmentation

In order to segment a market, it must be divided into separate groups which have distinct needs and characteristics. Each segment may hold potential for different products or require a separate marketing mix.

There are many ways to segment markets, especially in export marketing. Below are a few segments that will be discussed in more detail throughout the section:

  • Geographic Segmentation
  • Demographic Segmentation
  • Psychographic Segmentation
  • Global Market Segmentation

Geographic Segmentation

Geographic segmentation divides markets into different groups based on regions, countries or even regions within countries. For example, the “North American” market could include the United States, Canada and Mexico. However, Mexico could also be segmented into the “Latin American” market.

Other geographic segments throughout the world might include:

  • Western Europe
  • Central Europe
  • Pacific Rim
  • Asia
  • Southeast Asia
  • Middle East
  • Caribbean

These regions are too large to be target markets, but they are regions where targets might be located. Within each segment there are differences in population density, climate and purchasing power which will help you to further refine your target.

Demographic Segmentation

Demography is the study of people, and is an important variable in market segmentation. If you have a good idea about whom your customers are in the domestic market, it makes sense to try and locate them in other areas of the world. The following is a list of some common demographic segments.

  • Age – Children, teenagers, young adults, adults, middle-aged, elderly
  • Gender – Male or female
  • Family Size – Ranging from single to 5+
  • Family life cycle – Young, single, married, kids, empty-nest or older
  • Income – Under $10,000 to beyond $100,000
  • Education – Grade school, high school, college, graduates
  • Nationality – Any individual within a country or different nationalities within countries

The variables depend on types of products you are marketing and your current customers. From this list you might target single women who are college graduates and in a profession that leaves them little time to prepare meals; or, you may choose to target high-income families with more than five kids. In both cases, you are not limited to any specific geographic segment, but to demographics. Because many demographic traits are universal, you can often target the same “types” of people with success no matter where they live.

Psychographic Segmentation

People in the same demographic may have different social classes, lifestyles and personalities. Psychographic segmentation divides markets by how individuals feel about themselves, their aspirations and goals in life. Marketing is often described as creating a “psychic bond” with customers and making them feel good about buying your products.

For example, many customers around the world are interested in U.S. products that represent the “American West” for its sense of freedom, adventure and open space. A company based in South Dakota has used this fact to gain a foothold in the Japanese market. The company exports gourmet mustard to customers in Japan who not only use the product, but collect the decorative jars as a prized possession of Americana. This might also be considered a form of “benefit” segmentation, where there is a distinct social advantage to using an imported product that is unique in content as well as packaging.

Another type of segmentation is by occasion, such as a particular holiday or event that might increase the use of a certain type of food. For example, exports of kosher food always increase in advance of the Jewish Holy Days.

Global Market Segmentation

Global consumers often have similar needs and purchasing behaviors despite their geographic location. Many consumer-oriented food exports are global in scope. Just as you might find some U.S. states to have strong sales; very similar markets can be found across the globe. Many customers have comparable tastes, regardless of language, culture, economics or politics. This is also referred to as “Intermarket Segmentation”.

Market Targeting

With proper segment profiles, a company may begin the process of evaluating each market and choosing one or several markets to enter into. Consumers in similar segments with common needs and characteristics can then been separated into the initial target markets.

In order to determine which target markets to begin with, a set of factors for evaluation should be set. These factors include market segment size and growth and overall attractiveness of the market. Each factor should be evaluated based on your company’s goals, capabilities and resources.

  • Market segment size & growth: The right size and market growth rate are unique to each exporter. The best market is not always the largest one.
  • Overall attractiveness: Market research should provide a good idea about how competitive a market is for products like yours or potential substitutes to yours, as well as price sensitivity for distributors and consumers.
  • Company goals, capabilities and resources: Consider your own goals and objectives against your company’s ability to provide marketing support.

Market Positioning

When introducing a product into a market, it is important to consistently relay its attributes to potential customers. Your message should provide a clear and distinct advantage of choosing your product over the competitions’.

“Positioning” the product is an important component of the promotional mix. Positioning begins with identifying where your products have a comparative advantage. In the business of food export, the comparative advantage sought is often on innovation, quality and value. A product’s position needs to have a relative advantage to be chosen over other products, and needs to be seen as distinct and superior. Products should produce profit for the importer while remaining affordable for the consumer.

The recipe for Market Positioning success includes: an appropriate business partner, export assistance agencies and support and long-term commitment from the company’s management.

So what’s the next step?

For more detailed exporting information relative to your specific business please register for our Food Export Helpline™ service. There are always specific issues and questions that are unique to your company, products, and export markets. With the Food Export Helpline™, you’ll speak with an industry expert who’ll put his more than 20 years of experience to work for you. There are no canned answers, only insightful, customized advice specifically for you.
Click here for the Food Export Helpline.

Or, register for our Market Builder program. This service provides customized, in-market research to help you determine if a market is right for your product. Exporters can find new distributors or importers, receive valuable feedback about their product and gain industry insights on topics such as the distribution process and import regulations and restrictions for 18 international markets.

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