1

CHAPTER XIX CHAPTER XIX PRICING IMPORTED GOODS & PRICING IMPORTED GOODS &

DISTRIBUTION CHANNELSDISTRIBUTION CHANNELS

Cost of Imported Merchandise Value Marketing Distribution Channel Selection of Sales Representative Sources of Information

2

Cost of Imported GoodsCost 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

3

Cost of Imported GoodsCost 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

4

Cost of Imported GoodsCost 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

5

Cost of Imported GoodsCost 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.

6

Cost of Imported GoodsCost 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

7

Value MarketingValue Marketing

(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

8

Distribution ChannelDistribution Channel 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

9

Distribution ChannelDistribution Channel

Industrial products: Importer--> Sales Rep-->Distributor-->

End User Importer--> Distributor--> End User Importer--> End User

• Sales Representative = Manufacturer's Representative

10

SSelection of a Sales election of a Sales RepresentativeRepresentative

(1) Through referrals. Most successful manufacturer's representatives do not advertise.

a. Referrals from other sales agencies: Agencies selling other products to the same market

b. Referrals from other importers: Importers of similar but noncompetitive products

c. Referrals from potential buyers of your products

11

Selection of a Sales Representative

(2) Advertising Advertising a. In the industry publication: Every industry

has its own magazine. b. In MANA's Agency Sales magazine or

Directory of Manufacturer's Sales Agencies• Manufacturers' Agents National Association (

MANA, www.manaonline.org)

c. Trade show: A sign "Reps Wanted in ________"

Thorough investigation of the representative's credentials before signing any agreements

12

Sources of Information

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