Strategy for Exporting a U.S. Product to Venezuela

¶ … exporting water filters to Venezuela will vary depending on the size of the initial entry into the Venezuelan market: whether the entire country is targeted or just the principal cities. This will have an effect on the cost of shipment, and therefore cannot be accurately estimated until the planned market entry is made more exact. However, certain costs can be estimated, based on generally available information.

Initial market exploration and business set-up costs:

It would be advisable to purchase a detailed business climate report from a reputable company. The cost of this will be between $1,500 and $2,500.

The executive in charge of creating the Venezuelan operation, including contracting with a local distributor and setting in motion advertising plans, will need to make a minimum of four trips to Venezuela. The estimated cost of these trips, assuming five days' duration each and departure from Los Angeles, is:

$1,475 (hotel and lodging)

600 (ground transportation)

500 (meals and entertainment)

Total:

$2,575

Times 4

$10,300

The above estimates were derived from entering flight and hotel requests on Travelocity, departing Los Angeles, arriving Caracas, Venezuela.

An initial payment to the local distributor should fall within the $3,000 to $5,000 range, to cover his or her locating storage and facilitating local pack and ship to retail outlets.

Initial advertising, considering the inflation that exists in Venezuela, would probably parallel that of the U.S. Limited to newspaper, radio and the Internet, the initial costs would probably be in the $75,000 to $100,000 range.

Exclusive of the costs of shipping and customs, the initial entry into the Venezuelan market is estimated to cost approximately $112,800, taking the highest of all figures given above.

The above figures also assumed the executive would be fluent in Spanish. If that is not the case, then it would be advisable to add a translator for each five-day trip at $200 per day, for a total of $4,000.

Sales forecast:

The sales forecast assumes an average retail price of $19.00. It is estimated that, in the first six months, 50,000 units could be sold at that price, for gross retail income of $950,000.