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Learning Objectives

Preparation for Export Transaction

The students should understand some special terms.

[Important and Difficult Points]

Chapter 4

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4． 1 Market Research

Research on the countries or regions: The exporter can obtain many desired

information and data from various sources such as governmental departments concerned;

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4． 1 Market Research

customs offices; trade; professional and business associations; private business firms; trade journals and directories; advertising media; libraries; university research organizations; banks; foundations; interviewing other business people, etc.

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4． 2 Research the market.

The frequently adopted promotion strategies are sales literature, point of sale advertising, packaging, sponsorship, showrooms, trade fair and exhibition, publicity, public relations, word of mouth, telephone selling; personal selling, etc.

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4． 2 Research the market.

So we can do this by offering the right marketing mix –“The Four P's”: the right product; at the right price; available through the right channels of distribution: place; presented in the right way: promotion.

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4． 2 Research the market.

Heinz M. Goldmann, a world-known expert in promotion put forward his famous "AIDA" principle in promoting a product: A – Attention (the attention of potential customers is attracted); I---Interest (an interesting in the product aroused); D---- Desire (creating a desire for the product); A--- Action (encouraging customers to take prompt action).

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4.3.Investigation of Credit of Customers

Credit is life-blood of trade.The following is some examples investigation of credit of customers.

[1] Seller’s enquiry to reference given by buyer [Confidential]

Dear Sirs,

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4.3.Investigation of Credit of Customers

We have had a request from Messrs J. L. Dyer & Co. of Port Elizabeth S.A. for supplies of our products on open terms. They have given your name as a reference, saying they have done business with you for the past five years.

Only a tool

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4.3.Investigation of Credit of Customers

As we understand that their requirements may be to the amount of 2 000 pounds monthly, we should be grateful to you for an opinion on their ability to meet a liability of this size.

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4.3.Investigation of Credit of Customers

information which you could supply would be very welcome, and would of course be treated as strictly confidential.

Yours faithfully,

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4.3.Investigation of Credit of Customers

Favorable reply to letter No.1 [Strictly confidential]Dear Sirs, Replying to your letter of... under reference

No. HD/C. we can give you the following information.

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4.3.Investigation of Credit of Customers

The firm you mention is well-known in local business circles and appears to have a good reputation. It has been established for over 20 years, to our knowledge, and conducts a fairly

extensive import trade in our line.

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4.3.Investigation of Credit of Customers

We have been doing business with them for just over five years on quarterly account terms and can say that their obligations to us have been punctually met at all times.

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4.3.Investigation of Credit of Customers

Although their credit with us has never reached the level mentioned in your letter, we would have no hesitation in granting them this amount, if asked.

This information is given without responsibility, of course.

Yours faithfully,

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4.3.Investigation of Credit of Customers

[2] Seller’s letter to trade association Dear Sirs, We have been referred to you for information

on their credit standing by Messrs .Lyle & Co. who have asked us to supply goods to the value of 1 100 pounds against their first order.

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4.3.Investigation of Credit of Customers

We should be very grateful to you for any information you can give us about their activities and the scope of their transactions, as we hear that they may place further and larger orders.

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4.3.Investigation of Credit of Customers

We thank you for courtesy and assure you of strict confidence.

Yours faithfully,

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4.3.Investigation of Credit of Customers

In particular we should like to know whether you think we should be taking a fair risk in granting a 1 100 pounds credit in respect of this first order, and up to what amount you think we could go with safety in the future.

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4.3.Investigation of Credit of Customers

Favorable reply to letter No.2 Dear Sirs, We can supply the following facts regarding

the firm mentioned in your enquiry of Aug. 8.Established in 1940 as import/export dealers, it now has a sound business with a high turnover.

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4.3.Investigation of Credit of Customers

It owns good business premises and has an office staff of 75.

Local enquiries reveal that its annual purchases exceed 25 000 pounds. Its directors are well-known locally and well thought of.

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4.3.Investigation of Credit of Customers

Our opinion is that the credit you name could safely be granted. The figures given above in respect of other credit transactions may act as a guide to you in fixing your credit level.

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4.3.Investigation of Credit of Customers

We hope this information will be of assistance to you. Yours faithfully,

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4.3.Investigation of Credit of Customers

[3] Seller’s letter to his bank manager Dear Sir, I am thinking of granting credit to Messrs…

of...of whom I have only slight knowledge gained during a few months of trading on a cash basis.

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4.3.Investigation of Credit of Customers

If you can find out anything about their financial and credit standing, I shall be very grateful to you. They give me only their bankers, The...Bank of... as a reference, and they estimate their monthly orders at about 800 pounds.

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4.3.Investigation of Credit of Customers

I hope that you will be able to assist me.

Yours faithfully,

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4.3.Investigation of Credit of Customers

Unfavorable reply to letter No.3 Dear Sirs, Replying to your enquiry DD/CC of…we

regret to say that we cannot give information in this case. We would advise you to act with caution.

Yours faithfully,

Only a tool

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Terminology Practice

Market price: The price at which supply and demand

are in a state of equilibrium.

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Terminology PracticeTotal product: The promotion of a product,

involves considering it as a "Total Product": its brand name, presentation, labeling, packaging, instructions, reliability and after-sales service are all part of the total product.

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Terminology Practice

Marketing mix: The combination of product, price, promotion, and distribution strategies a company uses to reach a specific target market.

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Terminology PracticeTotal product: The promotion of a product, involves

considering it as a "Total Product": its brand name, presentation, labeling, packaging, instructions, reliability and after-sales service are all part of the total product.

Distribution channels: The means by which goods are distributed.

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Terminology Practice

Credit: A promise by one party to pay another for money borrowed or for goods and services received.

Credit enquiry: An enquiry into the reputability of a business house and its ability to meet financial commitments.

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Terminology PracticeTrade association: A nonprofit organization of

professionals in related businesses and industries, established to serve the common interests of its members.

Feasibility study: An analysis of whether or not a proposed course of action is possible.

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ExercisesExercisesWrite three letters according to the text:(1) unfavorable reply to letter No.1(2) unfavorable reply to letter No.2(3) favorable reply to letter No.3

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ExercisesWrite three letters according to the text:(1) unfavorable reply to letter No.1(2) unfavorable reply to letter No.2(3) favorable reply to letter No.3