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The basic functions of national trade promotion organizations.

The range of activities that a national trade promotion organization (TPO) can implement is quite broad and diverse. A selection must therefore be made to ensure that those most important for the export community are among the TPO's priority functions. Some trade promotion activities can be considered as basic, as they are necessary for any type of promotional effort, while others may be optional. Export promotion and development activities can be grouped in four broad categories: product and market identification and development, trade information services, specialized support services and promotional activities abroad. The selection of activities within these categories and the way in which the TPO implements them depend on such factors as the requirements of the export community; the availability of resources to the TPO, both human and financial; the nature and degree of diversification of the products that are or can be exported; and the characteristics of the target markets.

Products and markets

TPOs in many developing countries still need a better knowledge of what export products they should be promoting and also the features of the main foreign markets for those products. This information is fundamental for deciding where to direct the organization's promotional and development efforts.

One of a TPO's principal activities is therefore to identify current and future products available within the country for sale on the international market. The TPO's product specialists should assess the country's export supply situation through visits to local producers and exporters. Working groups including leading manufacturers and exporters in each sector, as well as representatives of trade or industry associations, can be set up to assist the specialists in this task. The information collected through these company visits should be noted on a standard questionnaire.

The questionnaire used for assessing export supply should cover not only the company's production and sales possibilities but also its export assistance needs. Such information can help in preparing overall promotional programmes, as well as tailormade support programmes for specific firms.

Product and company profiles: Product profiles can be produced for dissemination to potential foreign buyers as a result of an analysis of the questionnaires. They can cover either individual products or groups of products. They should include such details as the volume of the item available for export from the country, prevailing prices, and principal producers and exporters.

The preparation of company profiles is a related activity. This information is likewise useful for foreign buyers, as it gives them precise details for selecting potential suppliers who should be contacted. The TPO itself can also use such profiles in its promotional work. The profiles should be prepared on the basis of information collected during the export potential study. They should describe not only the general characteristics of the companies but also their production capacities.

These product and company profiles can be compiled into a single volume for different groups of products, thereby providing an overview of the supply situation by sector. Such a publication will be most useful to foreign buyers. The information should be updated regularly.

Market profiles: As a complement to the above, the TPO product specialists, with the assistance of the country's commercial representatives abroad (when they exist), or with other sources, should prepare market profiles that identify specific possibilities for sales.

Market profiles give an overview of the characteristics and requirements of target export markets and the major opportunities in them. They can serve as a basis for directing the TPO's promotional efforts. The profiles should highlight sales prospects for local exportable products. Since market conditions change frequently, the profiles should also be revised periodically.

To prepare market profiles the TPO officers concerned should collect data on the target country's major categories of imports, the general characteristics of those imports, consumption patterns, import rules and regulations, tariffs, marketing conditions and requirements, price levels, distribution channels, bilateral and multilateral trade agreements and so on. This information can be obtained through desk research as well as through data provided by the official commercial representative in the market concerned, or with the assistance of specialized institutions such as chambers of commerce.

The profiles can be disseminated to manufacturers and exporters to inform them of general economic and commercial conditions in target markets, as well as specific export opportunities that they can take advantage of either on their own or with the TPO's assistance.

Market studies: Another activity that is useful for a TPO in its trade promotion work is the production of market studies. Such studies, which involve more extensive research than the profiles discussed above, can give a comprehensive picture of the main features of a particular market for a selected export product sector. Studies of this type should be conducted on the spot in the market(s) concerned, preferably by a TPO market specialist accompanied by one or two representatives of suppliers in the sector.

The country's commercial representative posted in the market can help coordinate such study missions. The survey team should disseminate its findings upon return to interested exporters and prepare a written market report. The report can serve as a basis for initiating product adaptation and marketing activities.

Given the costs involved, it is advisable for a TPO to limit the number and scope of full market studies that it prepares, focusing only on products for which clear evidence exists of both adequate production capacity and significant potential on export markets.

Programmes for product promotion: The development of product promotion programmes is linked to the product and market activities discussed above. Such programmes concentrate promotional efforts on a given product or group of products. The TPO's draft promotional programme for a particular item or sector should be discussed with the producers and exporters concerned. Under the leadership of the TPO's product specialists, a working group can be formed of such company representatives to review the initial plan and then follow up on its implementation in conjunction with the TPO. The business sector's cooperation is especially important throughout to identify any eventual bottlenecks in the programme.

Product samples: The acquisition of samples of foreign products is often required to implement such product promotion programmes effectively. Samples are useful in providing concrete information on the characteristics of items in demand in the market and they are particularly helpful in product adaptation. Given the costs involved of purchasing samples, however, they should be obtained on a selective basis, concentrating on articles with clear export potential. It is often possible to get free samples from importers, who provide them with the idea of developing future business. Catalogues of producers, wholesalers and distributors in the foreign market can also be obtained for use along the same lines.

Product adaptation: Product adaptation is a basic component of product promotion programmes as mentioned above. Local producers often need to get details on technical and design requirements for their export articles to market them more competitively in the target market. Market research and direct contacts with potential buyers can also provide essential information for product adaptation work.

The TPO's assistance in product adaptation does not generally require a separate specialist for this purpose. Rather this task calls for a team effort, with the participation of TPO staff already working in marketing and production, as the changes required may range from the use of more appropriate raw materials to new product and packaging designs.

Company marketing plans: In its marketing assistance work, the TPO should also help formulate and implement marketing plans at the company level. Such plans should cover specific marketing channels for the firm's products in a given market, sales conditions, delivery terms, volumes to be offered, product adaptation requirements, pricing, packaging, quality control and publicity. This assistance could be linked to the TPO's broader product promotion programmes for the sector as a whole, discussed above.

Several TPO functional specialists will probably be required to work with the TPO's product and market staff in drawing up and following through with the company-level marketing plans. The country's overseas commercial representatives should also contribute to this activity, since their direct contact with foreign buyers should make them familiar with the practices followed by successful suppliers of other countries in that market.

Trade information services

Operating a trade information service is another basic activity that a TPO must undertake as part of its work for exporters. The lack of familiarity with foreign markets at the producer and exporter level is one of the most frequently mentioned constraints among the business community in developing countries. A centralized trade information service at the TPO, linked with other institutions such as chambers of commerce, can help tackle this problem. Such a service is also an essential tool for the TPO's product and market development activities in general.

The information needs of exporters must be identified so that the service can focus on subjects of maximum benefit to the users. Systematic contacts with individual companies are the best way to keep up to date on exporters' requirements. Records can be set up on a company basis showing the subjects of priority interest to individual users.

Effective mechanisms for collecting, analyzing, interpreting and disseminating such information must be developed, and TPO staff must be trained in this task. Efficient dissemination is particularly important to ensure that full use is made of the data available. It is important to choose the dissemination means according to the type and urgency of the information concerned. The TPO's trade information staff should also regularly check that the information being provided corresponds to users' needs and that the users are taking advantage of it.

Detailed methodologies have been developed for establishing and operating trade information services. ITC, for example, has done extensive work on the subject, including a number of publications concerning trade information techniques and sources, and a range of advisory activities.

Support services

A TPO's specialized support services are aimed at helping export companies increase their expertise in foreign trade techniques. A TPO should work closely with specialized institutions already set up in some of these functional areas and should undertake only those services that are not adequately provided by the other bodies.

Export support services cover a wide range of subjects. The list below includes those that could be considered the most basic for a trade promotion organization.

Export procedures: TPOs can assist new exporters in particular in understanding the procedures required for carrying out export operations. A TPO can also identify existing procedures in the country that constitute a constraint to efficient exporting and make recommendations to the authorities on revising them.

Some of the activities that a TPO can carry out include providing on-the-spot advice to individual exporters on procedural matters, preparing guidelines and manuals on the subject, developing information files on regulations and procedures in foreign markets, and organizing workshops for exporters.

Ideally one TPO officer should specialize in the question of export procedures. That person should be sufficiently well versed in the subject to answer individual requests from exporters.

Export financing: One of the biggest problems of exporters in developing countries is insufficient knowledge of sources of financing for their international marketing operations. In many cases this prevents them from getting actively involved in export trade. In addition many of them do not know how to prepare a credit application for such financing.

A specialist in the TPO should be responsible for identifying sources of financing for production and export purposes and the conditions involved, including the documentation required. Printed material should be prepared for exporters, summarizing this information. On-the-spot advice to exporters should also be available at the TPO. Seminars and lectures can be organized for exporters on this subject in cooperation with chambers of commerce and other business associations.

As part of their work in export financing, the TPO specialists should help identify inadequacies in the country's financial facilities and recommend measures to the appropriate authorities that could improve the competitive position of the export community.

Product quality: A TPO should be in a position to persuade exporters of the need to adopt appropriate quality management objectives, policies and procedures to improve their export products and thereby strengthen their international marketing position.

The TPO's quality officer should disseminate general background on the concept of total quality management as well as specific information on quality requirements in target markets, particularly those involving inspection, testing and certification of export goods. The systematic analysis of claims concerning export quality can help the TPO identify areas in which its assistance should be concentrated.

In addition to those direct activities, the TPO should establish close links with the national standards institution, the national quality control body and similar agencies to strengthen the role of these specialized organizations vis-a-vis the export community.

Export packaging: The TPO officer in charge of export packaging questions should obtain the assistance of outside organizations in this work. Joint activities could include identifying sources of supply for labels and packaging material, advising individual exporters on adapting export packages and labels to foreign market requirements, disseminating technical information on packaging materials and organizing packaging workshops for specific export products.

The TPO should also encourage and assist packaging institutions in maintaining an information service on export-related packaging technology and design and in conducting tests to determine compliance of export packages with national and international packaging standards and specifications.

International physical distribution: Another subject on which a TPO should be in a position to provide advice is international physical distribution (IPD). The TPO officer responsible for this function should be well informed of the facilities and costs of different types of IPD operations. Since transport conditions change frequently, it is more practical for the TPO to maintain regularly updated files for use by exporters than to issue elaborate publications on the subject.

Training events can be organized, such as short seminars for selected groups of exporters, preferably those handling similar products, on the best means of transporting their goods to specific markets. The TPO officer should also, as part of his or her duties, identify common transport problems of exporters and make appropriate recommendations to the authorities concerned on ways to tackle them.

Training: Training is a fundamental activity for improving a country's export performance and is therefore a prime concern for a TPO. Given the extent of this task and the specialization required, it is usually advisable for a TPO to leave this job to training institutions. TPOs can however help identify the training needs of the export sector. In some instances the TPO can also organize joint training with relevant outside organizations on specific subjects, as mentioned above.

Advice to policymakers: The close links that TPOs in principle maintain with the export community puts them in a good position to offer advice to policymakers on ways to improve the country's export framework. One example is suggestions on export incentive schemes. The TPO should not, however, be responsible for administering such schemes, as work of that nature would interfere with the organization's normal promotional activities. Incentive schemes should instead be operated by other, separate institutions.

Other services: Among other specialized support services, a TPO could also consider those concerning costing and pricing, publicity, legal matters, export credit insurance, the export of services, joint export mechanisms, free zones and investment promotion. The decision on whether to add these to the TPO's programme should be undertaken in the light of the TPO's particular situation. (For details on these see ITC's publication "Monograph on Export Promotion and Development.")

Activities abroad

Trade promotion activities that a TPO undertakes in foreign markets complement the direct support that it gives to exporters at home. The range and extent of a TPO's functions abroad depend not only on the resources available to it for this purpose, but also whether or not an official overseas commercial service exists. The degree of product and market diversification that the country has attained and the export development targets set are also factors determining the TPO's overseas involvement.

Some of the more important of such activities are participation in trade fairs and the organization of sellers' missions.

Participation in trade fairs: The TPO should establish an annual trade fair participation programme based on the country's potential in specific markets and the relevance of scheduled fairs to its exports.

A clear distinction should be made between the practical aspects of arranging participation in a fair (such as stand construction, rental of space, transport of materials, hotel reservations and travel arrangements), and the development and implementation of a promotional strategy (including selecting the fair, the exhibitors and the products; and drawing up the publicity programme). A separate trade fair servicing unit in the TPO should be responsible for the first group of actions, unless the annual trade fair programme is quite small, while the second should be the task of the TPO marketing staff.

The TPO marketing specialist working with the product sector concerned should be present throughout the fair if possible, or at least coordinate efforts with the commercial representative in the host country. When the fair is over, the TPO staff should follow up with the exporters on results achieved and further action required.

(For a more in-depth discussion of how to organize trade fair participation, ITC's various publications and training material on the subject should be consulted. Concerning evaluation of trade fair participation, see the article on page 12.)

Sellers' missions: As a complement to trade fair participation, sellers' missions aim at establishing close contact between exporters and foreign buyers to identify new sales opportunities. Sellers' missions can be undertaken in conjunction with trade fairs or independently of them.

The membership of the mission and its itinerary should be carefully planned, preferably as a joint effort of the TPO, the commercial representatives abroad and export companies. It is often advisable for a TPO marketing officer to undertake an exploratory trip before the mission to assess export possibilities and the competitiveness of the products under consideration. In some cases, this preliminary work can be done by the country's commercial representative in the market, who can also advise on the mission programme.

Sellers' missions should be led by a TPO product specialist or other high-level TPO officer. That person should be responsible for preparing the mission's final report and disseminating it to the participants and other manufacturers and exporters in that sector, as well as ensuring that the necessary follow-up actions are carried out after the mission.

Other activities: Two other types of trade promotion activities that complement trade fairs and trade missions can be carried out by a TPO in foreign markets: inviting foreign buyers to visit local producers on their premises and promoting subcontracting for export.

In the case of visits of foreign buyers, the selection of those to be invited should be made in close consultation with the commercial representatives in the foreign country. The visiting buyers should indicate precisely what changes are required in the products of interest to them so that maximum benefit can be obtained from the exercise.

The costs of this activity should be covered to the extent possible by the local firms so that they are stimulated to give the necessary attention and follow-up to the visitors.

Concerning subcontracting for export, the TPO can help local manufacturers make production arrangements with foreign business partners as a means to expand their exports. The TPO can identify local firms that can produce or assemble goods for third parties, and commercial representatives abroad can assist in identifying potential foreign firms interested in subcontracting arrangements. This type of TPO activity has been especially successful in developing countries that have low production costs but lack information on foreign markets.

(For a more comprehensive discussion on the subjects covered in this article the document on which it is based can be consulted, "Monograph on Export Promotion and Development." Also see the specialized publications that ITC has issued on many of these subjects (a current list is found on the back cover of this issue).)

Camilo Jaramillo is ITC's adviser on the institutional aspects of trade promotion.
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Author:Jaramillo, Camilo
Publication:International Trade Forum
Date:Jul 1, 1992
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