CHAPTER XIX PRICING IMPORTED GOODS & DISTRIBUTION CHANNELS Cost of Imported Merchandise Value Marketing Distribution Channel Selection of Sales Representative Sources of Information

Cost of Imported Goods (1) FOB price (2) Ocean or air freight (3) Marine insurance premium (4) Bank charge (5) Unloading charge (6) Customs duty (7) Merchandise processing fee (.25%) (Minimum $25 & Maximum $485) (8) Harbor maintenance fee (.125%) (9) Customs broker's fee (10) Customs bond fee 1 Landed cost at importer's harbor

Cost of Imported Goods (11) Trucking from harbor to warehouse (12) Storage at warehouse (13) Product liability insurance2 Net cost to importer 1 Single transaction bond premium: $3.00 per thousand dollars of value plus duty (general merchandise) 2 Applicable to imports with no domestic representation by a foreign manufacturer

Cost of Imported Goods Product Liability Insurance Premiums Fruit $4.522 per $1,000 receipts Computer components $6.016 Tools $7.140 Clothing $4.011 Shoes $1.924 Plastic piping $10.325 China (Tableware) $6.260 Pens/Pencils $2.992 Giftware $4.962 Premiums are normally higher for start-up operations

Cost of Imported Goods Retail price: Minimum four times FOB price General markup (1) Mail order items: 300 percent (2) Wholesaler: 30 to 50% (3) Retailer: 100% (4) Importer: Minimum 30 to 50% when stock carried, 10 to 20% when no stock Do not import anything without a firm order. Better get a letter of credit from a buyer.

Cost of Imported Goods Until you have built up strong distribution channels, stick to sample sales without carrying stock. Stipulate key specifications in your purchase order and letter of credit The 3rd party inspection such as SGS International is recommended if you import from unfamiliar suppliers

Value Marketing (2) Give more than the consumer expects (1) Offer products that perform (2) Give more than the consumer expects (3) Give guarantees: a no-question-asked guarantee or a longer guarantee (4) Avoid unrealistic pricing (5) Give the consumer the facts: Detailed information (6) Build relationship (Relationship Marketing)-Frequent-buyer plan, 800 numbers, and membership clubs

Distribution Channel Consumer products: The success of a product: 30% product & 70% marketing One region or one market segment and be successful. Very difficult to "serve it all" and be successful. Consumer products: Importer--> Sales Rep--> Wholesaler--> Retailer--> Public Importer--> Wholesaler--> Retailer--> Public Importer--> Sales Rep--> Retailer--> Public Importer--> Retailer--> Public Importer--> Public

Distribution Channel Industrial products: Importer--> Sales Rep-->Distributor--> End User Importer--> Distributor--> End User Importer--> End User Sales Representative = Manufacturer's Representative

Selection of a Sales Representative Through referrals. Most successful manufacturer's representatives do not advertise. Referrals from other sales agencies: Agencies selling other products to the same market Referrals from other importers: Importers of similar but noncompetitive products Referrals from potential buyers of your products

Selection of a Sales Representative (2) Advertising In the industry publication: Every industry has its own magazine. In MANA's Agency Sales magazine or Directory of Manufacturer's Sales Agencies Manufacturers' Agents National Association (MANA, www.manaonline.org) Trade show: A sign "Reps Wanted in ________" Thorough investigation of the representative's credentials before signing any contract

Sources of Information PIERS (Port Import Export Reporting Service) www.piers.com