Building Effective Distribution Channels

Building Effective Distribution Channels A “ground zero” approach for SME’s new to, or in the early stages of entering, the International Marketplace....
Author: Kerrie McDaniel
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Building Effective Distribution Channels A “ground zero” approach for SME’s new to, or in the early stages of entering, the International Marketplace. This session will help SME’s discover an effective method to build international distribution channels. Presented by: John A. DeLuca, International Sales Manager, Liberty Pumps Inc.

Claudia Salgado, U.S. Commercial Service, Mexico, Embassy of the United States of America (Via Satellite)

Special Introduction Timothy J. McCall Director Rochester U.S. Export Assistance Center U.S. Department of Commerce 400 Andrews St., Suite 300 Rochester, NY 14604 Tel: 585-399-7065 Fax: 585-423-7570 [email protected]

So, Let’s define “Ground Zero”…

Let’s also define SME… •

Small and medium enterprises or small and medium-sized enterprises (SMEs, small and medium-sized businesses, SMBs, and variations of these terms) are companies whose personnel numbers fall below certain limits. The abbreviation "SME" is used in the European Union and by international organizations such as the World Bank, the United Nations and the World Trade Organization (WTO).

SME (small-to-medium enterprise) is a convenient term for segmenting businesses and other organizations that are somewhere between the "small office-home office" ( SOHO ) size and the larger enterprise . The European Union has defined an SME as a legally independent company with no more than 500 employees.

In the United States, the Small Business Administration sets small business criteria based on industry, ownership structure, revenue and number of employees (which in some circumstances may be as high as 1500, although the cap is typically 500).[4] Both the US and the EU generally use the same threshold of fewer than 10 employees for small offices (SOHO).

Was Liberty Pumps an SME at Ground Zero?


• • • • •

Founded in 1965 Family Owned Around $30-35M Just under 100 employees ~ 1% sales were “international”

30,000 foot look at the challenge…. Goal: International Market Penetration (International market share = 25% of US) resulting in “Targeted Sales Amount” (25% of company turnover) by 2020

30,000 foot look at what needs to happen….

1. 2. 3. 4.

What do I have to sell? Where can I sell it? What is GTM/channel by country? How do I find “Mr. Right”?

How do I avoid Mr. “Wannabee”?

30,000 foot look at how do I do that… before looking for Mr. Right

• Exporting Plan – “Failure to plan is planning for failure”

• Export Toolkit

Closer to the ground look at it….

1. 2. 3. 4.

What do I have to sell? Where can I sell it? What is GTM/channel by country? How do I find “Mr. Right”?

Part 1 – Export Policy Commitment Statement Part 2 – Situation Analysis 1.Products 2.Operations 3.Personnel and Export Organization 4.Resources at Liberty Pumps 5.Industry Structure, Competition and Demand Part 3 – Marketing Component 1.Identifying Target Markets 2.Evaluating and Selecting Target Markets 3.Product Selection and Pricing 4.Distribution Methods 5.Terms and Conditions 6.Internal Organization and Procedures 7.Sales Goals: Profit and Loss Forecast Part 4 – Tactics 1.Primary Target Countries 2.Secondary Target Countries 3.Indirect Marketing Effort Part 5 - Export Budget Part 6 – Implementation Schedule

Let’s drill down and take a Ground Level look…. Export Compliance Program

Worldwide Shipments

Consulting with Experts (e.g. WTCBN)

Compliance Legal

Written Plan part of ISO Quality Manual


Ok… back to finding Mr. Right 1.

Create a profile of the “ideal” agent/dealer/distributor for your products: • • • • • • • • • • • •

Market they Serve End User base “Product Line Card” Sales turnover Territory coverage Number of Sales People Marketing resources Warehousing capability Payment terms Shipping/receiving logistic Language skills Other????

Understand the Scope of the market you are trying to penetrate… the markets are usually smaller! •

What you have in the USA

Most likely is not what you get abroad

Ok… Let’s start looking! #1- Your Network

Do you know Anyone?

Ok… Let’s start looking! #2- Market Research

• Professional Organizations

• Directories of Manufacturers

Directories of Distributors

Target Email Blast This approach is the result of your market research… mining all the resources mentioned for a list of “Targets” Recall: • • •

Professional Groups Directories of Manufactures Directories of Distributions

But how do you know which one is “Mr. Right” “Mr. Right”

“Mr. Wanabe”

• •

• •

• •

Exactly in your market Recognized as a premier dealer/distributor by potential end users Profitable, Successful, and growing Knows of your company and wants to add your products to the line card

• •

Kind of in your market Not a first tier player… goes to trade shows and tells potentials suppliers they “want to be” your dealer/distributor Not doing well… needs you to infuse some cash! Doesn’t care who you are!

Best Tool I have used to find “Mr. Right” and why… Why the best? • Targeted in-country market research (in 80 countries!) • Coordinated dealer/distributor search for the profile I defined • No language barriers • “Mid Term Report” with proposed action plan for dealer and/or distributor visits • Assistance with travel and accommodations • Assistance with translation service • Follow up support

The Gold Key Matching Service (GKS)

Obvious advantages

Hidden Advantages

• • • •

Speed Accuracy Ease of Use Cost

“Mr. Right will respond to a solicitation from the US Embassy… not so to your email blast… “Mr. Right” knows the US Embassy brings him only the “Right” US Companies… he has nothing to fear… only to decide if the fit is “right”

Go To: Claudia in Mexico City Make Introduction And bring her in on Skype Claudia to describe what typically happens from her side while executing a Gold Key Service Program

Get your Upstate NY Trade Conference passport signed by at least 10 exhibitors for a chance to win the following prizes, which will be raffled off and announced after the closing keynote Exhibitor Passport Prizes: Exhibitors: • Advanced Language Translation, Inc. 1 GRE/IBC/NYSERDA $500 Gift Certificate towards translation services 2 Time Warner Cable Business Class 3 Advanced Language Translation

Hong Wah Restaurant – $10 Gift Certificate

Mario's Via Abruzzi Restaurant – (2) $50 Gift Certificates

Mohawk Global Logistics $100 Gift Card to Black & Blue Restaurant

Richardson’s Canal House Restaurant – (2) $25 Gift Certificates

Speed Global Services Dictionary of International Trade & 50% off 2nd international shipment

The Cheesecake Factory – $25 Gift Certificate

The Spa at the Del Monte 50 minute Massage

18 County of Monroe Industrial Development Agency (COMIDA) Procurement Technical Assistance Center (PTAC)

Wegmans – $100 Gift Card

19 Employer Support of the National Guard & Reserves (ESGR)

Wilmorite Inc. – $50 Mall Gift Card

4 Freed Maxick CPAs, P.C. 5 Wells Fargo Bank, N.A.

6 KCI Engineering of New York, PC 7 JR Language Translation Services Inc. 8 RIT Saunders College of Business

9 Speed Global Services 10 RBS Citizens 11 FBI

12 US Small Business Administration 13 Mohawk Global Logistics 14 School of Business Administration and Economics, The College at Brockport 15 Gallagher Benefit Services 16 U.S. Department of Commerce

17 U.S. Customs and Border Patrol