Negotiating With Prospective Buyers
It is essential that the exporter should possess the necessary skill for negotiating with the overseas channels of distribution. The ability to negotiate effectively is needed for discussion with importers or trade agents. While conducting business negotiations, the prospective exporter should avoid conflict, controversy, and criticism with the other party.
During the conversation, the attitude should be to communicate effectively. There should be coherence, creativity, compromise, concessions, commonality, consensus, commitment, and compensation in business negotiations. The general problem you may face is about pricing. The buyer’s contention is that prices are too high.
It should be noted that though the price is only one of the many issues that are discussed during business negotiations, it influences the entire negotiating process. Since this is the most sensitive issue in business negotiations, it should be tactfully postponed until all the issues have been discussed and mutually agreed upon. As far as the price is concerned, you should try to determine the buyer’s real interest in the product from the outset, only then a suitable counter-proposal should be presented.
It should also be remembered that the buyer may request modifications in the presentation of the product. You should show the willingness to meet such request, if possible, provided that it will result in a profitable export business. Price being the most important sales tool, it has to be properly developed and presented.
Therefore, in order to create a favorable impression, minimize costly errors, and generate repeated business. The following points should be kept in mind while preparing the price list:
Submit a typewritten list, printed on the regular bond paper and laid out simply and clearly (with at least an inch between columns and between groupings) Prominently indicate the name of your company, its full address, telephone, and fax numbers, including the country and city codes. Fully describe the items being quoted. Group the items logically (i.e. all the fabrics together, all the made-up together, etc.). Specify whether shipped by sea or by air, f.o.b. or c.i.f. and to what port.
Quote exact amount and not rounded-off figures. Mention the dates up to which the prices quoted will remain valid.
Where there is an internal reference number that must be quoted, to keep it short (the buyer has no interest in this detail, and the more complex it is, the greater is the risk of error). One main point regarding export pricing is that while negotiating with overseas buyers, you may not remember the cost of a product.
It may also be difficult for you to remember the profit margin built in various prices quoted by you. A clear jotting of this information is not free from the risk of being leaked out to the competitors or to the overseas buyers. Some coding is, therefore, essential for the prices quoted by you so that at any stage/point of time, you can always utilize the information, enabling you to profitably negotiate with the overseas buyer. This can be done by assigning codes to the cost price.
For assigning codes to the cost price, you may select an English password consisting of 10 separate letters, each letter to represent a numerical figure. For example, CRAZY MOUTH is the password selected by you, where C=1, R=2, A=3, Z=4, Y=5, M=6, O=7, U=8, T=9, H=0. This password can be successfully used for recognizing various items of exports and their varieties.
Thus, a brass candle stand that is being quoted at N 100(sale price) but whose cost price to you is N25.50 will be coded as item number; RYYH and then assigned with a running serial number to make it more fascinating. You can decode the word; RYYH to write as N 25.50 so as to get an idea of the difference between the Sale Price and the Cost Price, which will provide you the range within which you can negotiate with overseas buyers.
Processing An Export Order
You should not be happy merely on receiving an export order. You should first acknowledge the export order, and then proceed to examine carefully in respect of items, specification, pre-shipment inspection, payment conditions, special packaging, labeling and marketing requirements, shipment and delivery date, marine insurance, documentation, etc.
if you are satisfied with these aspects, a formal confirmation should be sent to the buyer, otherwise, clarification should be sought from the buyer before confirming the order. After confirmation of the export order, immediate steps should be taken for procurement/manufacture of the export goods. In the meanwhile, you should proceed to enter into a formal export contract with the overseas buyer.
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