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Marketing Price

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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.

Global communication

The one major marketing activity that costs roughly the same in international markets than in domestic markets is the internet. While most businesses would use the internet as a part of their overall marketing, others successfully use the internet as their sole means of international marketing. There are many ways that the internet can be used to generate exports but, at the very least, websites should be tailored for target markets. Where appropriate, mirror websites should be set up with the appropriate country’s domain. Another relatively cheap support mechanism for international marketing activities is the establishment of a call centre. A call centre can respond to international calls 24 hours a day if required, and provide a seamless interface between potential buyers and the Australian business. It can reply to questions about the product, send out information and, if required, take orders. Many Australian businesses can access Export Market Development Grants to provide financial support for their international marketing activities. The annual grants provide a reimbursement of expenses such as travel, trade events, advertising, overseas representation, free samples, marketing consultants and the costs of bringing overseas buyers to Australia at a rate of 50 percent, above a threshold of $10,000. In effect, the Federal Government encourages Australian businesses to market their products internationally by underwriting some of the main costs. The ability of Australian businesses to spend money on international marketing will vary according to the business size and financial resources. It is difficult to quantify an ‘appropriate’ level of expenditure and even more difficult to assess a likely rate of return on this investment as there are so many factors to consider. However, the key for businesses contemplating incurring money on international marketing is research and planning: researching the potential for their business and what markets to enter, and planning the required funding available and resources required to maximise their chances of success. -Gary Cronin is managing director of Exportise, a grants consultancy firm: www.exportise.com.au

Advance Australian products

Australia is one of the strongest nation brands in the world, largely due to consumers thinking of Australia as a clean and green environment, with high safety standards and friendly and innovative people. "The global hunger for ‘things Australian’ presents unique opportunities for savvy Australian businesses to benefit by effectively branding their products as Australian," says Ian Harrison, chief executive of the Australian Made, Australian Grown (AMAG) campaign. The AMAG logo has helped businesses market Australian exports for more than two decades. The logo licence fee is based on 0.1 percent of the budgeted annual sales turnover for registered products, which makes the return on investment very attractive. Victorian-based manufacturer Kelly & Windsor has successfully exported their alpaca bedding products using their ‘Australian-ness’ as a key selling point. "Our story used to be that our products were made from alpaca fleece. It still is, but we soon realised that the fact that our products were Australian made was actually just as important to our target markets," explains Trevor Beuth, Kelly & Windsor’s managing director. "Using the Australian Made logo enables us to leverage from the high consumer and retailer recognition of the logo. Consumers trust the logo, and using it on our products gives us a certification of authenticity." He adds: "Australia represents many of the same things as our products: clean, green and high quality. In international markets where consumers may not know what alpacas are, we find that using the AMAG logo sets us apart from other global bedding manufacturers." Case study provided by Australian Made Australian Grown: www.australianmade.com.au

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