Marketing Price
Tenth in our True Cost of Exporting series is international marketing. Exporters face greater costs marketing internationally than they do domestically. Here’s a guide on minimising costs while maximising benefits.
While the direct costs of international marketing such as advertising, trade shows and representation may not be significantly greater than domestic marketing, it is the indirect costs that are greater. This includes staff costs, as the time spent marketing internationally tends to be greater than similar circumstances in the domestic market.
In a situation where a business attends a two-day trade fair in Australia, it would usually require a maximum of four days for three or four staff, whereas an overseas trade fair would require a minimum additional two days travel time, plus the costs of airfares, accommodation and meals. This is likely to double the costs for the trade fair. In this case, the business could reduce costs by employing temporary local staff, or use the staff of its local agent.
However, the most effective means of maximising the benefits would be to organise sales calls and other marketing activities around the trade fair. This could perhaps include using the fair as a hub, with travel to other nearby destinations before or after the fair, sending staff to different locations. In some instances it may be better to buy a round-the-world ticket, as these fares are usually cheaper than return fares. This approach should be well planned with appointments made in advance and appropriate marketing materials available to ensure maximum benefit.
The same approach should be applied to overseas sales calls, with targeted appointments to key customers in the markets made in advance. If the trip involves appointing a local distributor or agent, undertake as much background research as possible to ensure you appoint the best possible distributor or agent and to prevent wasting time during the trip.
Accommodation can be very expensive in a number of overseas cities but it does not always pay to stay at less expensive hotels. Hotels near your clients or near the airport could prove cheaper, as travel costs and travel time can be greater between less expensive hotels and where your clients are located.
Together, we market
An option not often used, but potentially very effective and cost efficient, is joint marketing. Here, competing businesses organise their marketing jointly and share costs on an agreed basis. Usually these businesses have common markets, are geographically close, and have similar products.
An example would be wine producers in a regional area that agree to joint market under a regional ‘brand’ and share marketing materials and costs. While this requires a considerable degree of cooperation between the businesses, it also offers synergies in marketing and logistics that make the activities cost effective.
Advertising is a potentially expensive means of marketing internationally. It is important to research costs of advertising in target markets and to be selective in choosing publications and advertising agencies.
Costs may be reduced by using domestic advertising materials as the basis for international advertising, but take care to ensure that it is suitable and effective in the market selected. Often, advertising in conjunction with your local distributor, or even allowing them to take responsibility for advertising and reimbursing them an agreed portion, may be more cost effective.
Successful exporters often appoint a local representative responsible for all marketing activities. The representative could be the distributor, or a local marketing business, or an employee relocated to the overseas market. It is important that the representative appointed has sound knowledge of your product and is capable of undertaking the marketing required. The location is also important if the representative is responsible for a number of countries, to minimise travel time and cost while maximising marketing activities.
The representative usually covers all marketing activities, including making sales calls, organising local trade events, organising advertising and other marketing material, and handling local enquiries. If the representative is not the distributor, it’s important the representative and the distributor work closely together on joint sales calls and marketing events, and by ensuring marketing materials and advertising is appropriate and effective.
Having a representative based outside Australia is expensive. Costs include not only their salary or retainer but also the costs of maintaining an office, travel and associated costs. A minimum cost of $100,000 per annum is not unusual and, depending on the market chosen and the number of staff involved, it could be substantially more. Most businesses will have significant upfront costs when they appoint an overseas representative and they must budget accordingly.
Businesses should seek to have a performance criteria built into the representative’s contract, an effective means of ensuring that costs can be related to sales achieved.
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