Having determined the best international markets for your products, it is important to understand how to get your cars in front of buyers. Unfortunately, this is not a one-size fits all consideration as conditions in export markets largely dictate the type of strategy used.
Strategies for Finding Buyers in a Foreign Market
A developed and well-understood target market may require less involvement by the exporter whereas a target market that is not well known may require more in-depth planning and involvement by the exporter.
An export strategy can be broken down into two components: the first involves how you will advertise your products in a foreign market; the second involves how you will carry out sales transactions. These two can overlap and can involve a variety of methods.
For example, advertising in more advanced markets can be accomplished through online advertising. In markets with fewer consumers connected to the internet, more traditional advertising will need to be employed such as having an individual on the ground in the target market who can get the vehicle in front of consumers.
Exporting and Sales Strategy
There are two basic ways to export a vehicle: direct or indirect. Direct exporting is the most straightforward method, simply requiring an exporter to find a foreign buyer and then make all arrangements for shipping the vehicle overseas.
Under this strategy, an exporter will need to find buyers prior to exporting, which raises a number of concerns related to marketing a vehicle in the target market. As referenced above, online classified advertising or auction sites can provide a useful outlet in markets where consumers are accustomed to making purchases online.
Of course purchasing a bicycle online from a seller 100 miles away does not compare to purchasing a new car from a seller 5,000 miles away. In this sense, the marketing strategy needs to be more sophisticated than a lower value transaction. The consumer’s fears of swindles or miscommunication between buyers and seller need to be alleviated. Despite these barriers, data indicates that consumers in emerging and established markets will turn to online sources to search for vehicles to buy.
Carmudi reports that: “Nigerian car dealers are getting more and more digital when advertising their listings. Around 80% of car dealers are now primarily focused on advertising their car listings online. Car dealers in Nigeria are aware of the potential that social media holds but have yet to fully utilize it, with 20% focused on advertising on social media and 20% not using it at all. According to this study, advertising on newspapers and auto expos are dying trends, with only 10% of car dealers advertising on each.” (1)
Given the growing reliance on online sales, sellers who want to break into an overseas market should align their advertising strategy with the fact that increasingly car buyers are going online to conduct research that guides their purchasing decisions.
When considering direct exporting as a strategy, it is important to consider that, although this method is less expensive as agents in the target market do not need to be paid for their services, The Southern United States Trade Association notes that any cost savings may be offset by the time needed to organize a direct marketing plan.
The group states: “Direct marketing requires a total dedication of time and resources, and finances to identify opportunities in a foreign market. The company and its management team are responsible for market research, planning and distribution of the product in a manner, which will produce satisfactory sales results. This is a feasible option for larger companies that have time and resources to devote to exporting.” (2)
For sellers who do not want to use the direct exporting method, indirect exporting provides exporters with the ability to have a party “on the ground” in the target market. Indirect exporting can employ a number of strategies:
Commissioned agents act as “brokers,” linking your product or service with a specific foreign buyer. The agent or broker will not fulfill the orders, but rather will pass them to you for approval. However, the broker may assist, in some cases, with export logistics such as packing, shipping and export documentation.
Export Management Companies (EMCs)
EMCs act as “on the ground” export department in a target market, representing your company to prospective overseas buyers. The management company looks for business on behalf of your company and takes care of all aspects of the export transaction.
EMCs will act on behalf of your company, negotiating export contracts and then provide after-sales support. Some of the EMC’s specific functions include conducting market, promoting vehicles overseas, assessing proper distribution channels, handling export logistics similar to the duties performed by a customs broker.
Indirect exporting can reduce a significant amount of uncertainty, given the fact that both the exporter and consumers have a local contact in the target market. This can have the effect of providing information that is more accurate for the exporter who wants to know specific and verifiable information about the target market and can act as a way to ensure consumers that there are no risks with doing business with the exporter.
However, these assurances come at a cost as Agents and EMCs are paid a flat fee or on a commissioned basis. This can cut into the exporter’s profit margin. However, it can also increase sales, which may make the investment in an agent or and EMC worthwhile.
Consider the Circumstances
Like many other decisions in the business of exporting vehicles, the decision to adopt a direct or indirect marketing strategy will depend on the circumstances found in the target market.
For example, if an exporter is selling in a nearby market such as exporting from the United States to Canada, indirect exporting may not be required. However, in far off markets that are not well known and may contain barriers to market entry, using an indirect exporting strategy may be the most effective means.