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    to COTANUM GmbH

    Creating the Gateway for Enterprises into the European Market

  • Tailor-made Services

    Focusing on growth in the European Market

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  • Remain ahead of the Competition

    Gain a prominent position in the European Market

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  • Increase Brand Awareness

    Generate sustainable revenue

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  • Developing Sales Solutions for the European Market

    and putting them into Action

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Opportunities within the European Market

Developing Your Business – Sales and Distribution

Do you want to expand your business within Europe?

Are you currently considering launching new products?

Are you already active in Europe, but not satisfied with the results?

23

major industries

47

countries within europe

741

million potential customers

Develop your business within Europe

Our principles in conducting Business

What we do

Combining a broad range of professional expertise with rigorous analytical analysis, we help clients to clearly articulate their problems, understand the paths to and barriers of growth, and effectively align marketing and sales resources. However, our advice and support does not stop there. We are ready to support your business and take effective action to enable your entry and growth into the European market. Our customised solutions for manufacturers and exporters are designed to address the specific challenges and opportunities of your industry sector. We regard ourselves as concept integrators, bringing expertise from management consulting, sales and marketing, and technology and operations to deliver solutions that lead to real positive impact for your business.

Focus on our Clients´ needs

We assist our clients with the integration of the customer experience across sales channels. Our team provides the necessary backup supporting sales in specific industries whilst creating tailored solutions for serving the European market. We provide our customers with a clear route to enter the European market and sustain growth there. Our goal is to gain a comprehensive understanding of our client’s requirements and match those requirements to our capabilities accordingly.

Long-term thinking

In business development, we continuously make real-life decisions that require balancing short- and long-term trade-offs. We strive to obtain a profound understanding of the timeline of a project, as well as what the core business guides to our approach are. This strategy generates profitable results. We seek to deliver sustainable solutions through the advising of the strategic management of sales and marketing, and assisting in their realisation.

Global Diversity

We embrace global differences in culture, and the business acumen of our clients, colleagues, and partners. It is a priviledge to work with international clientele, and our aim is to utilized our knowledge of local culture and values in the development of our relationship. We strive to develop a deep cultural understanding of each client and we will tailor our approach to local attitudes, tastes, languages, management styles, and personalities. To be successful, we need to mold business actions in accordance with local cultures. Regardless of position, we treat all people with consideration and we are always prepared to listen.

What are your plans for sales in Europe?

Sales and Distribution Channels for Manufacturers in Europe

When choosing sales partners and a distribution channel, you are making an important strategic decision. For exporters and manufacturers, this decision cannot be changed later on without much effort or high costs. Therefore, this choice is fundamental for the long-term and strategic importance of your European business sales organisation. In the European markets, there are different distribution channels and sales opportunities, depending on the industry sector.
The channels you deploy to go to the market directly impact the effectiveness of your sales strategies and the profitability of your future turnover.

All different channels have unique characteristics, performance and costs, depending on your product assortment and who you are selling to. Leading sales organisations understand and operate their channel mix to achieve optimized revenue whilst delivering the value and brand experience customers feel they deserve.

Distribution and sales companies vary in the following ways:

The level and depth of technical service and advice they provide

The industries in which they operate

The clientele they work with

Their method of regional expansion (i.e., local dealers vs. distribution chains)

The range of services they provide (e.g., stock keeping, repair, maintenance)

Selling Through Wholesalers and Distribution

Many international manufacturers start their sales through wholesalers and importers. They don´t have direct access to the European market and they don´t have a sales organisation in the market. This leads to sales chains such as this:

Chain for international manufacturers using wholesales and distribution

Chain for international manufacturers using wholesales and distribution

Manufacturer → Wholesaler → Distributor → Customer

Here, the customer is the end user of the product and either a company (B2B) or a consumer (B2C). Many products are suitable for this type of sales channel, though some are not. Often, this model applies to products that need only few additional services or support to succeed. If documentation such as an instruction manual is provided and sufficient, this sales model may be acceptable and suitable for many exporters. But this model has its limitations when products are more sophisticated.

If products are sold through organisations that sell many different products, even competing products, the exporter cannot expect the importer or wholesaler to give much attention, service, and promotion to their product. Often, importers and wholesalers even request the Asian manufacturer to deliver products in neutral packaging without any markings. This allows the importer to switch its supplier at any time. Accordingly, the manufacturer receives no promotion or advertising for their brand. Instead, the wholesaler will promote its own brand.

Often Asian exporters are requested to customize the labelling and packaging of the products with another brand name. This typically is the name of the importer or distributor. This way of entering the European market is standard for many Asian companies; in particular, Chinese manufacturing companies and Chinese exporters. They do not have their own access to customers and, therefore, depend on distribution. As this is the foundation of the distribution business, the distributor will not support direct contacts between the manufacturer and the customer. As long as the distributor has sole access to the customers in the market, he is in better control of the business and is in a strong position relative to manufacturers in Asia and elsewhere.

Building up a Brand Name with an Own Sales Organisation

Only a few of the larger Chinese companies have managed to establish a brand name in Europe. The advantages of an Asian manufacturing company having a brand name in Europe are:

Higher profitability
Control over prices and conditions
Freedom from pressure to be replaced by an importer
Opportunities to sell a wider range of products
Direct access to customers

For an Asian company, building a brand name is a difficult and expensive task. It requires thorough analysis, a wise strategic vision, and expertise in operations.

For individual industries such as automotive, food, pharmacy, machinery, and tools, industry-specific sales and distribution companies have arisen in Europe that have the best access and close cooperation with their customers on a daily basis. Some operate at the level of large manufacturers, but are only active in certain narrow segments.

Technology Products

Technology products require complex sales solutions

Some serve a wider range of customers in many industries. Suppliers to the automotive industry act as Tier 1 or Tier 2 suppliers and are expected to have qualified experts in place and available for their key accounts around the clock.

For large system builders in turnkey projects, purchasing decisions are made by technical experts, who pass their demands on to purchasing departments, which buy directly from the manufacturer without any distribution. This involves only the sales personnel for the customer and technical experts where required.

Some products are marketed from manufacturers to end users through trade agents. One one hand, trade agents offer a high degree of specialization, but on the other hand they often cover a limited territory. They combine high-level problem-solving skills with sales expertise. If your products are technically sophisticated, this may be a sales solution to consider.

Strategic Choices in Selection of the Sales Model and Sales Channel

Often the product and type of customer industry determines if just one sales or distribution channel is needed to access your target industries, or if you need to develop industry-specific solutions.

Basic Sales Channels for B2B and B2C products

Basic Sales Channels for B2B and B2C products

For any new manufacturer that wants to enter the European markets, these general questions arise:

Should we use the same sales organisations and distribution channels as the incumbent manufacturers?

Do we want to compete with manufacturers that are already established in exactly the same domain?

Do we have a competitive advantage that would make the distributor favour our products and services?

The last question is important. If there is no competitive advantage, the distributor will not invest much in a new supplier, but will stay with his existing partners. New manufacturers should be aware of this situation and carefully evaluate their strategic situation and their options.

Some more specific questions to explore include:

What do we believe to be the most promising sales channels?

Do we need to evaluate alternative sales and distribution channels?

What are our chances and opportunities to find alternative European partners for selling in the European market?

Who has access to the customers we want to target?

Do we need our own sales company or representation in Europe?

Market entry into Europe means answering these and other important and fundamental questions for your sales and distribution strategy. Cotanum can help you in analysing your business model and sales opportunities, and in finding the best way for your products and services to reach customers in the European market. Contact us to learn more.

Market Pricing in Mature Industries

The number of commercial goods and industry services offered in the European marketplace has steadily incread over the last few decades. The variety of products available has also increased, due to there being more suppliers (both domestic and foreign), as well as a result of the extension of existing product lines to cover market niches.

Proper pricing improves your bottom line and customer base

Proper pricing improves your bottom line and customer base

This proliferation is not limited to commercial goods, but is visible also in consumer products such as mobile phones and computers.

Large offerings available to European customers, combined with limited market growth in Europe, leads to market saturation in many industries.

With increasing competition on prices and with little room to increase turnover, manufacturers need to practise different strategies to generate profitable growth.

A common strategy for firms extending their product lines is to differentiate their offerings vertically. Vertical product differentiation means providing different quality levels at different prices to capture customers’ differences in their willingness to pay for quality. This strategy is used, for example, by established brand companies to generate turnover in market segments that they cannot cover with their core offerings. Expanding sales in a saturated, and therefore limited, market is the driving force behind today’s pricing strategies.

Firms may also offer a line of products that vary not in quality but in other ways. New technical features and adaptations to different markets are common examples of how manufacturers can expand their product range. Some technical properties of a product may even be required to enter certain markets. For example, many European industries—including railways, aviation, and pharmaceuticals—require specific approvals and certifications. These certifications work in favour of established manufacturers and suppliers. New suppliers need to take the effort, time, and financial resources necessary to enter these markets successfully.

Selling in such markets brings an additional challenge for an international manufacturer. Typically, the items in product lines that vary only along a horizontal dimension are priced the same and undergo fewer fluctuations. This allows competitors to find a more stable price point. The larger your industry, the more competitors you find in your market and the more room the market will have for product niches. With more manufacturers competing in a market, there are more marketing messages reaching customers telling them that a particular class of products is something they need.

roadmap and milestone A clear roadmap is essential in new markets

A clear roadmap is essential in new markets

Selecting the area of the market where you want to compete is an important step in your marketing plan. As your market niche is defined by a specific customer base and products within a set of specified characteristics, you will also determine the approximate price at which you will sell. Placing your products in a particular niche will allow you to exploit the turnover and profits allocated to this part of the market, but it will also restrain you in pricing and other aspects of your marketing and sales activities.

Pricing is one of the most powerful tools a company can use to increase revenue. Developing a strategy to set the right prices, differentiate prices by customer type and industry, and use multiple distribution channels more effectively are all opportunities to generate turnover and to improve your bottom line.

An effective practical pricing model turns to analytics to make decisions. By considering a host of factors such as market intelligence, competition, pricing, and wholesale acquisition costs, you can arrive at a set of actionable insights.

At Cotanum, our expertise in pricing at each level of the distribution chain helps our clients in analysing the impact of price changes and in formulating an effective pricing strategy. Our ability to track industries, price points, quantities, and even market trends, helps further forecast demand and shore up our clients’ resources accordingly.

Logistics, Shipping, and Warehousing

Key Factor for International Manufacturers: Logistics

Freight, shipping, and logistics are essential matters for international manufacturers when exporting into Europe. Handling, packaging, transport, and stock keeping demand intelligent solutions to deliver excellent customer service or else they will become costly problems.

Shipping, transports, storage and logistic become competitive factors

Shipping, transports and logistic are competitive factors

In the past, efforts and costs related to logistics were traditionally viewed as costs added to the product. Suppliers needed to balance their costs and efforts against the quality of supply services they gave to their customers. However, modern sales organisations now recognize that mastering logistics can be a source of competitive advantage.

If you are an international manufacturer and sell to Europe, freight and logistics are a place where you can optimize and develop advantages over your competition.

Service Providers for the Logistic Value Chain

International exporters will typically work with an international logistics provider that has a subsidiary in the European destination harbour or with a European freight forwarder as soon as the delivery has arrived at its European destination.

A major challenge in developing a winning logistics model is to align shipments, stock keeping, and the distribution chain to satisfy these critical points:

Short delivery times for the customer
Seamless merging of supply chains
Balancing fluctuating demands of products
Keeping costs at appropriate levels

All of the above criteria can be exploited and optimised to give you a competitive advantage over other market players.

Today’s freight forwarder services include transportation, customs brokerage, and clearance. While in transit, your products will be properly insured and your sales organisation will be able to follow your products digitally with tracking and registration services.

Advanced sales organisations are able to predict the arrival of expected deliveries with little deviation, ensuring  trusted delivery schedules. This increases customer satisfaction and opens the door to becoming a qualified supplier to major European companies.

These kinds of services distinguish top suppliers from second-rate manufacturers.

Top suppliers have an organisation or a logistic partner that can undertake the required steps to connect with the supply chain used in their industry. Different industries practise different models of integration for sub-suppliers.

Example: While retail businesses have almost no requirements for adapting to production chains or logistic pipelines, other industries—like the automotive industry—require greater efforts from their suppliers. Systems to control and maintain this integration need to be in place, either at the manufacturer’s European subsidiary or at an external service provider. Such providers are in all the major international logistics hubs in Europe, such as Rotterdam, Hamburg, and Antwerp.

Stock Keeping will be another Essential Part in Your Supply Strategy

For good customer service and fast availability of products, spare parts and accessories must be available to all your sales facilities in a timely manner. At first, it seems logical to call for decentralized storage locations to service the customer in the various countries of Europe. However, this leads to a large stock commitment and a need for sophisticated logistics planning. Working with a central warehouse for a large sales area—for example, several countries in Europe—leads to shorter delivery times and less capital tied up. But this requires a quick transport service provider and fast-reacting supply management to keep delivery times short.

Cosco Netherlands - Container Ship Registered in Hong Kong unloading in Hamburg

Cosco Netherlands – Container Ship unloading in Hamburg

Connecting your sales channel directly to your supply chain and warehouse is another solution to improve the quality of your supply. ERP solutions from different software companies provide software modules to connect your sales administration system with your stock and cargo/freight service. Manufacturers from abroad (like China) gain access to stocks and inventories in Europe. This allows the manufacturer to develop updated and efficient production and supply strategies and minimize the number of obsolete products in the supply chain.

Are your products heavy, sensitive, and therefore expensive to transport? If so, your logistics plan should keep this in mind and optimise the distances from your factory to the clients’ destinations.

Will your products be unpacked, merged, and packed again before being delivered to the customer? Do you need to add country-specific elements to your products? Do you need to facilitate such tasks and do you need a partner to do this work for you? We are experienced in finding carriers who can configure, assemble, and ship single deliveries all over Europe on demand.

There is the additional possibility of working with a subcontractor and a bonded warehouse. In this case, the duties and taxes are to be paid when the product is taken from the “Zollfrei Lager” (a special storage area under  customs supervision of goverment authorities) and delivered to customers in Europe. In all other cases, customs and taxes need to be paid before releasing your products to the European market. This may be an effective alternative for expensive spare parts, which may sit in a storage room for a long time before they are needed.

With today’s tools and infrastructure in Europe, international exporters no longer suffer from a disadvantage against local European manufacturers

At Cotanum, we know from experience that logistics, shipping, and stock keeping require individual customer-tailored solutions. Depending on your sales and distribution model, we can assist you in shaping the future of your European export business through logistics, freight, and warehousing.

We can support you in selecting an organisational logistics model and logistics supplier that best support your corporate strategy in the European market. Depending on your targeted customers’ demands, we can improve your competitive edge and assist you in forming a highly focused organization. Your distribution model will follow a well-defined sales and supply strategy, designed to deliver sustained growth, profitability, and customer satisfaction.

Sales Solutions for the European B2B Market

In many industries, international producers do not sell their products directly to end users in the European market.

Sales of machines requires technical support and qualified service

Sales of machines requires technical support and qualified service

They use intermediaries to perform a variety of sales-related functions accompanying the flow of products from the manufacturer to the end user. These organizations represent the marketing channel or the distribution channel. Some products are distributed through only one channel to the end user, while other products are made available to the end user through different parallel channels. Depending on the sales territory, manufacturers may have different in place models for various regions at the same time.

Pros and Cons of Sales Channels

Why do sales channels and distribution exist at all? Why do manufacturers not sell directly to their European customers?
International manufacturers are competitive in product development. China, for example, has increasingly competitive producers who manufacture industrial and consumer products of increasingly improving quality.
Sales happen locally, close to the end user, and include tasks like:

  • Gathering market information about potential customers, conditions, and competition
  • Having sales personnel close to the customer to stay competitive
  • Providing the funds to finance and maintain inventories
  • Installing and maintaining quick delivery solutions for products and spare parts
  • Having appropriate technical support near the customer
  • Handling complaints and warranty issues professionally
  • Speaking the same language as your customer
  • Demonstrating the manufacturer’s product at the customer’s facility
  • Helping customers with installation and setup of products at their facilities
  • Providing certifications and approvals from governmental inspectors
  • Giving continuous feedback to the manufacturer about the market and the product

Depending on the type of product, some or all of the above services may be required.

Producers from overseas do not have much of a sales and service network in foreign markets. When supplying a large international territory, often you will have multiple places where the above services will need to be provided.
Therefore, marketing and distributions channels are required to provide these tasks for their subsidiaries to cover a specified region and keep in continuous contact with end users.

Does the Use of Sales Channels Have Any Cons for Manufacturers?

From the manufacturer’s point of view, the use of a sales channel opens many great opportunities, but also comes with some sensitive aspects that need to be addressed.
The manufacturer leaves the responsibility for sales to the end user in the hands of their channel partner, such as a distributor. From this moment, the manufacturer has very limited control over the impression of the product the distributor generates for the customer.
Pricing for the product and for services are in the hands of the distributor. Even if the manufacturer issues list prices, discounts and bonus systems may erode or undermine them. This can put pressure on margins and lead to problems with sales channel partners if products in neighbouring markets are available at different prices.
Producers may find it difficult to monitor the quality of sales and services the distributor offers. The quantity and quality of manpower the distributor allocates to the manufacturer’s product line is difficult to monitor as well.
When distributors form a relationship with a manufacturer (and are striving to obtain exclusive rights for supplying a market), they often present themselves in the best possible light by making lifty promises. Once the contracts are signed and the daily sales work begins, however, things begin to look different. The new product demands more initial sales work with little turnover in the difficult beginning of a market entry. Distributors are highly conscious of where best to invest resources. Quick money with little effort is often favoured over long, demanding sales activities for new products with uncertain future results. It may happen that only a few initiatives are taken for the new products and easier work with well-established products is preferred over the more inconvenient work of market development. This opportunistic view of the business is normal and needs to be taken into account when dealing with sales channels and distribution.

Proper Information about Sales Activities are Difficult to Obtain

It is important but almost impossible for an international manufacturer to ensure that a channel partner really invests manpower and other resources into the product line of an unknown market newcomer. In this situation, a local consultant with access to the market can be of assistance in providing unbiased information about distributors, final customers, and the competition to the manufacturer.
Once a manufacturer is established and achieves a large turnover and healthy profits, distributors will be attracted to them by the expectation of earning easy money with little effort. Sales channel partners will compete for the right to work with a manufacturer. Only a few international manufacturers have obtained such a favoured position.
The sales channels chosen will affect all other marketing decisions. The choice for one sales model, based on a set of sales channels, will exclude certain marketing instruments, while requiring you to provide certain other elements to manage, support, and run your selected channel.

Pricing

In Europe, channel members collectively earn 40% to 70% of final sales. Retail products, moving through consumer marketing channels, have higher percentages, while industrial products tend have lower percentages. For the efforts and services channel partners undertake, they expect a significant part of the price in return.
Developing a pricing model that is suitable to your sales channel, therefore, is a demanding but possibly very rewarding task. Successful companies carefully balance the services they require against the mark-up they pay for in the competitive environment in which they operate.

Customer Group

Each sales channel serves a limited part of a market and the customers within the market. You will make sure that your sales channel sufficiently covers the selection of customers which are matched to your product. Mismatching your target customer group/sales channel will dramatically reduce your sales opportunities.

Sales Force and Advertising

As you use a distribution channel in your target market, you will need to educate and motivate your channel partner. Your sales force should be prepared to train your sales channel appropriately to sell your product in a qualified manner and with confidence. You will be expected to provide support in advertising, promotion, and other services. For example, many exporters use incentives to motivate their dealers and to make sure that their sales channel favours their products over competitors’ products.

Competition in the Sales Channel

Effectively, this means that the first competition for an international manufacturer starts at the sales channel in Europe. The preferred sales channel partner is the one with:

  • Coverage of the complete European sales region
  • Open communication of market information to the manufacturer
  • Good access to and preference at the target end-user group
  • Expertise and qualification to deliver product support and product service
  • Fair reward expectations to keep prices moderate
  • Motivation to put strong effort into your products’ sales

Problems for New Manufacturers to Work with Sales Channels

Choosing the right local partner for sales and market development

Choosing the right local partner for sales and market development

But will the manufacturer’s products and the support they provide be attractive to the sales channel partner as well? In saturated markets, this is often not the situation for new market participants.

Choosing the right local partner for sales and market development

If competitors have already established positions within the marketing channels, it is difficult for a new player to find attractive distribution partners.

Why is this so difficult? The answer is very simple: distribution partners prefer easy sales opportunities with established brands over the high level of effort needed for sales of unknown manufacturers with uncertain future results.

Therefore, being attractive as a manufacturer will result in having a strong position to choose a qualified and motivated sales channel partner. A manufacturer with a limited offering will need to improve to become attractive and fully exploit his sales opportunities, or choose another sales model more suited to his situation.

Business Process Outsourcing

Sourcing

There is a great deal of activity in business process outsourcing and whilst these intervention can be extremely powerful in delivering significant gains in organizational effectiveness and efficiency, mistakes happen and when they do, they can be costly. Sometimes this is because a particular project has not been thought-through well enough. To avoid this problem, we advocate in every case the development of well-founded evaluation of the potential change, evolving, if appropriate, into a strong justification for that change. This we call a “sourcing business case”.
At other times, business process outsourcing and offshoring fail to deliver the benefits expected of them for a different reason. This is where, although individual sourcing projects might be well-founded, there is insufficient overall linkage of different sourcing projects within an organization.

Outsourcing business processes in the distribution chain gives you more flexibility

More flexibility and faster market access by outsourcing business processes in the distribution chain

Specific arrangements are put in place on a piecemeal basis, which leads to the establishment of management infrastructure that is more costly than necessary and, at worst, to some deals being out of line with top-level strategies and therefore result in value-destruction in a very real sense.

Our response to this problem is to advocate the development of “sourcing strategy” a macro-level view of the drivers and guiding principles for specific sourcing activities within an organization. As will already be evident, we use the term “sourcing” to cover business process outsourcing. Developing business process outsourcing strategies is a substantial piece of work which combines theory, research and case-study experience to clarify the key concepts, introduce powerful methodologies and identify best practices and lessons learned. We are anticipating that it will become a key resource in an industry where there is a lack of consistency over approaches and terminology and where poor decision-making is still all-too-common.

Our purpose is to be a source in experienced sourcing practitioners in buy-side organizations and it simply:

  • Introduces our sourcing strategy methodology
  • Explores key lessons learned at each stage of the methodology
  • Supports the implementation and realization of outsourcing projects

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