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TERMS OF SALE
The products of various countries compete in foreign markets on other than price and quality considerations. The successful exporter must be prepared to adopt a certain measure of flexibility in the terms of sale which he offers, as these often play an important part in concluding a sale. Exporters who insist upon irrevocable letters of credit will obviously not get very far in selling in markets where others offer to ship with documents against acceptance, thus giving the buyer from 30 to 180 days to meet the draft after he has obtained possession of the goods. It is often very difficult to set down exactly in advance of actual negotiations just what terms will be demanded by foreign customers. The Bureau has information on the usual credit terms demanded in most foreign markets. They vary with the methods of distribution used and the length of time required-because of the distances of the consuming markets from the ports-for the imported product actually to get into the hands of the ultimate distributor. Nevertheless, in conducting an export market analysis, knowledge of the terms of sale offered by competitiors is essential information preparatory to making an actual quotation.
MEANS OF DISTRIBUTION
It is equally important to know how the product is usually distributed, and what facilities for its distribution exist. Some markets are more highly organized than others, in respect to the channels of distribution. While some products are sold through importers, who in turn distribute them through wholesalers and jobbers to retailers, others may be sold directly to wholesalers or retailers, with or without the intermediation of a resident agent. The making up of the export discount sheet and its distribution to the proper types of distributors must depend upon an actual knowledge of the channels of distribution available, as well as the ones used in the distribution of the particular product. The Bureau's lists of foreign buyers or Foreign Trade Lists classify potential buyers under their appropriate designation as an aid to exporters in this respect.
An export market analysis involves a thorough survey of the facilities available for making the shipment. A knowledge of the steamship lines which touch the port of destination, the frequency of sailing, the rates charged, and the facilities of inland transportation afforded in the country of destination is all necessary before definite delivery dates can be promised or laid-down costs estimated. A thorough analysis in this respect will enable the exporter to quote prices that he knows will meet competition. Methods of packing will also depend, to a large extent, upon detailed information of this character; and a knowledge of the additional packing expense involved in meeting the peculiar requirements of a given market, and the trans
1 Credit and Payment Terms in Foreign countries; Trade Promotion Series No. 123; obtainable from the Superintendent of Documents, Government Printing Office, Washington, D. C., for 20 cents (no stamps).
portation methods used to reach it, will enable the exporter to quote prices that adequately cover all these contingencies. The Transportation Division of the Bureau can supply necessary details regarding shipping facilities to foreign markets.
The need for advertising and the use of traveling salesmen, together with the media and the methods used in both cases, as well as a thorough survey of any other methods used in the actual sale of the product in the market, are matters that should be covered in an export market analysis. Products that must be advertised must be quoted at prices that absorb the advertising expense. This expense varies from market to market, depending both upon the type of media, the methods used, and the intensity with which the campaign must be conducted. The experience in the American market is seldom an accurate criterion of what may be expected abroad. Advertising expenses may be greater or less, as the conditions warrant. Some products that have become well known in the United States through advertising are little known abroad and require extensive advertising conducted
in a manner effective in reaching the people in a given
Some products, such as leather belting, are best handled by employing traveling salesmen to call on the trade. Other products, such as tractors, must be sold by demonstration. In the case of others, such as medicinal preparations, extensive sampling to the consumer is found desirable. The thorough analysis of the situation gives the exporter the background upon which he can build his sales campaign. The Bureau's Specialties Division is the depository of much valuable information on foreign advertising and sales technique.
In every market there are certain times of the year during which the demand for imported products, especially fabricated materials, is greater than at other times. These selling seasons usually follow the harvests when agriculturists have sold their crops, paid their accumulated bills, and are ready to use such surplus as remains to buy not only farm implements and supplies, but also household furniture, clothing, and other imported supplies. In other markets, the demands for imported foodstuffs or raw materials for industry occur at certain periods when domestic supplies need to be supplemented by imports. An analysis of the market should show what these seasons of demand are, for they usually constitute the basis for consumer advertising programs, and salesmen must plan their trips so as to anticipate this consumer demand by booking orders for advance supplies to meet it, from wholesalers, jobbers, or retailers. No sales campaign can be planned intelligently without a charting of the selling seasons. Just as the harvests differ in different parts of the world, so do the selling seasons. In the Tropics, where many crops are harvested three or four times a year, the seasonal variations of demand will be less marked than in the Temperate Zone markets, where there are usually no more than two and sometimes only one harvesting season.
CLIMATE AND TOPOGRAPHY
It must be remembered that climate and topography play a leading part in any market analysis. Not all tropical markets are hot, large portions of the population living at high altitudes. Countries in the Temperate Zone often differ greatly in climatic peculiarities. Most of the large cities of the tropical west coast of South America are perched on the top of the Andes Mountains, where the nights and many of the days are cold. The climate of Manchuria, though it is in the same latitude as Japan, is much more severe, because of the absence of the Japan Current. The Regional Division is fully equipped to supply information of value to exporters on these matters.
Conditions surrounding the granting of credit in general in the market under analysis constitute important information to have on hand before the sales campaign is laid out. If collections are slow and bankruptcies are increasing, while the number of protested drafts is mounting each month, the exporter may decide to keep out of the market until conditions become more favorable. No matter how favorable the credit of the individual buyer may be, business conditions in the market as a whole may nevertheless make shipments on anything but cash with order, or its equivalent, the irrevocable letter of credit, highly inadvisable.
After the market has been analyzed and the various factors ascertained, a complete market analysis (see appendix A) may be prepared, on the basis of which the decision can be made as to (1) whether it is desirable to enter the market at all, (2) the extent to which preliminary development may be carried on, and (3) the necessary appropriation which should be set aside for development work. Every market analysis should be accompanied by a full plan of action, and once the venture is embarked upon, with every contingency accounted for, there need be no turning back, because of inadequate planning, until full success has been achieved.