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Exporting

Direct exporting: Rice exporting companies in VN like TraVinh Food Company,
TIGIFACO,…They directly export rice to many countries in Europe, Asia, Africa….do so, they can: • • • • Control over selection of foreign markets and choice of foreign representative companies Good information feedback from target market Better protection of trademarks, patents, goodwill, and other intangible property Potentially greater sales than with indirect exporting

But they have to bare: • • • Higher start-up costs and higher risks as opposed to indirect exporting Greater information requirements Longer time-to-market as opposed to indirect exporting

Indirect exporting: Fran Wilson Cosmetics : How does a medium-sized U.S. cosmetics firm sell 1.5 million tubes of lipstick in Japan annually? Fran Wilson Creative Cosmetics attributes its success to a topquality product, effective advertising, and a novel export marketing program. The firm’s Moodmatcher lip coloring comes in green, orange, silver, black, and six other hues that change to a shade of pink, coral, or red, depending on a woman’s chemistry when it’s applied. The company does not sell to department stores. According to a company spokesperson, “Shiseido and Kanebo (two large Japanese cosmetics firms) keep all the other Japanese or import brands out of the major department stores.” Rather, the company sells its Moodmatcher lipstick through Japanese distributors that reach Japan’s 40,000 beauty salons. The result? The company, with its savvy Japanese distributors, accounts for 20 percent of the $4.3 million of lipsticks exported annually to Japan by U.S. companies.

Advantages
• • Fast market access Concentration of resources for production

It has the least amount of commitment and risk but will probably return the least profit. The United States Direct Selling Association (DSA) reported that in 2000. Indirect exporting is ideal for a company that has no overseas contacts but wants to market abroad. reports that its 59 regional member associations accounted for more than US$114 Billion in retail sales in 2007. through the activities of more than 62 million independent sales representatives. and sales strategies. as opposed to direct exporting Inability to learn how to operate overseas Wrong choice of market and distributor may lead to inadequate market feedback affecting the international success of the company Potentially lower sales as compared to direct exporting. due to wrong choice of market and distributors by export partners. The management team is not distracted No direct handle of export processes. The intermediary is often a distributor that has the marketing know-how and resources necessary for the effort to succeed.• • Little or no financial commitment. Fran Wilson Creative Cosmetics of New York uses an indirect exporting approach to sell its products in Japan Direct Sales: Industry representative. The export partner usually covers most expenses associated with international sales Low risk exists for those companies who consider their domestic market to be more important and for those companies that are still developing their R&D. sales. • • Disadvantages • • • • • Higher risk than with direct exporting Little or no control over distribution. marketing. 55% of adult Americans had at some time purchased goods or services from a direct selling representative and 20% reported that they were currently(6%) or had been in the past(14%) a direct selling representative. marketing. etc. the World Federation of Direct Selling Associations (WFDSA). .

and the WFDSA and DSA require their members to abide by a code of conduct towards a fair partnership both with customers and salesmen.7 B US$ 1. the direct selling association of Germany. home delivery. and generous satisfaction guarantees. including the Bundesverband Direktvertrieb Deutschland.0 B US$ 2. uses multi-level marketing (salesperson is paid for selling and for sales made by people he recruits or sponsors) rather than single-level marketing (salesperson is paid only for the sales he makes himself). the cost for an individual to start an independent direct selling business is typically very low with little or no required inventory or other cash commitments to begin. Direct marketing is about business organizations seeking a relationship with their customers without going through an agent/consultant or retail outlet. (Direct selling is distinct from direct marketing because it is about individual sales agents reaching and dealing directly with clients.) .3 B US$ 10. Most direct selling associations. Direct selling often.5 B US$ 3.9 B US$ 3.Company Name Avon Products Amway Herbalife Natura Vorwerk Mary Kay Tupperware Oriflame Year Founded 2011 Revenue 1886 1959 1980 1969 1883 1963 1946 1967 US$ 11.6 B US$ 2.01 B US$ 3.9 B US$ 2.6 B Nu Skin Enterprises 1984 Belcorp 1967 According to the WFDSA. consumers benefit from direct selling because of the convenience and service it provides. but not always. Most national direct selling associations are represented in the World Federation of Direct Selling Associations (WFDSA).1 B US$ 1. including personal demonstration and explanation of products. In contrast to franchising.