Exporting Tactics during $US strength

During a recent peer group collaboration at a local University one of my colleagues related that his global clients were finding it harder to compete in global markets in 2015.  The financial press is rife with US domestic companies reporting lower 2015 sales due the strong $US.  These negative trends are caused by two phenomena:

1. It is harder to price compete with local manufacturers in export markets.  Your imported goods have increased in price with no perceived upswing in value.
2. Foreign subsidiary sales are now converted from local currency to $US at a reduced foreign exchange rate making consolidated sales appear weaker.

These trends are today’s reality.  Exporters generally have products with higher brand recognition, greater value perception and premium pricing.  They also have to compete with local manufacturers who don’t have the added import costs: freight, duty, differentiated packaging and literature.  You now need to dig in your heels and compete at a higher level…or lose share.  So what to do?
You need to support your channel to win.  Consider:

1. Specifically targeting two-five end user target accounts (your distributor’s customer)
   1. Accounts that re-export their good will become more price competitive in their segment.  Their volumes will increase, due to their improved ability to export, and you may be able to partner with these premium accounts.
   2. Sizable accounts that are vulnerable to local competitors.  Financially support the distributor with a time detailed plan to keep the end user current pricing programs intact.
2. Implementing a foreign currency sharing program with distributors.  Install a foreign exchange base rate with upper and lower boundaries so that end user pricing is stabilized within a range and costs are shared both high and low.
3. Reviewing your total value proposition.  Have you heard from customer testimonials and field feedback that there are further product benefits that were not completely understood at product launch.  It may be time to accent these additional benefits into your customer ROI equation.
4. Provide limited, short term benefit programs to shift expenses away from distributors, e.g. greater cost sharing for trade shows, product literature or training programs.
5. Consider special targeted VIP factory visits, customer in-house training seminars or other services that would boost end user customer intimacy.

The important issue is winning market share and retaining profitability locally.  Consider:

1. Increasing local market sales by expanding production overseas to meet market needs.
2. Reduce freight costs through carrier negotiations while gas prices are falling.
3.  Source final stage commodities overseas and assemble in bulk locally.
4. Shifting sales responsibilities to overseas subsidiaries to retain those accounts and not lose them due to uncompetitive pricing issues.

I don’t recommend a wholesale price change without analyzing the full impact to your bottom line.  There is no magic bullet to solve this $ currency problem, however, we all know it is less costly to retain an account than to go out and a find a new one.

If you need assistance designing a specialized program or exchange rate agreement let’s figure out together how we can reach your objectives.