“A Small Company’s Foray into International Marketing” Alumi...“A Small Company’s Foray into International Marketing” Fifth University of Delaware, Mechanical Engineering

“A Small Company’s Foray into “A Small Company’s Foray into International Marketing”International Marketing”

Fifth University of Delaware, Mechanical Fifth University of Delaware, Mechanical Engineering Alumni Career CelebrationEngineering Alumni Career Celebration

April 25, 2008April 25, 2008Patrick J. ReynoldsPatrick J. Reynolds

IntroductionIntroduction

•• PoolPak International Started in1986PoolPak International Started in1986•• We Make Dehumidification Systems for We Make Dehumidification Systems for

Indoor Swimming Pools.Indoor Swimming Pools.•• Product is Spin Off from York InternationalProduct is Spin Off from York International•• Revenues for 2007 ~ $14 MillionRevenues for 2007 ~ $14 Million•• Approximately 8% from ExportsApproximately 8% from Exports

Applications Applications –– Motel PoolsMotel Pools

Applications Applications –– Large PoolsLarge Pools

Applications Applications –– Really Large PoolsReally Large Pools

Products Products –– Large PoolsLarge Pools

Products Products –– Hotel & HomesHotel & Homes

First Exposure to International First Exposure to International BusinessBusiness

•• From 1990, We Received Inquiries from From 1990, We Received Inquiries from Many Foreign Country Reps Requesting LineMany Foreign Country Reps Requesting Line

•• We Were Seduced by Stories of We Were Seduced by Stories of Extraordinary Profits from Overseas Extraordinary Profits from Overseas Business.Business.

•• By 1995, We “Thought” We Had Reps in 30 By 1995, We “Thought” We Had Reps in 30 Countries, Countries,

•• But No SalesBut No Sales

I. Owner

V. General Contractor III. Architect

II. Pool Designer

VI.a. Mechanical Contractor A

VI.b. Mechanical Contractor B

IV. Mechanical Engineer

VI.c. Mechanical Contractor C

VI.d. Mechanical Contractor D

PoolPak Sales Representative

Typical PoolPak Sales Cycle and Actors

This Process Takes 2 to 5 Years!

Stumbling Toward the East & LuckStumbling Toward the East & Luck•• Made Trip to Taiwan and Hong Kong in 1994 Made Trip to Taiwan and Hong Kong in 1994 •• Visited “Rep” in Taiwan Visited “Rep” in Taiwan –– Gave Them TrainingGave Them Training•• Used York International Contacts to Meet York Used York International Contacts to Meet York

Rep in Hong KongRep in Hong Kong•• York Rep Not InterestedYork Rep Not Interested•• Gave Line to Associate of York RepGave Line to Associate of York Rep•• Associate “Sat” on Line for a YearAssociate “Sat” on Line for a Year•• While In Hong Kong, Met Another Rep While In Hong Kong, Met Another Rep

Through FriendThrough Friend--ofof--aa--Friend (Networking Friend (Networking Began) Began)

Stumbling Toward the East & LuckStumbling Toward the East & Luck

•• New Rep’s Owner Establishing US Citizenship New Rep’s Owner Establishing US Citizenship ––Living in Baltimore 6 Months per YearLiving in Baltimore 6 Months per Year

•• Owner Visited Factory Owner Visited Factory –– Was Impressed With Was Impressed With PoolPakPoolPak

•• He Attended Factory Sales Training ClassHe Attended Factory Sales Training Class•• He Sent His Key Salesman to Factory for Sales He Sent His Key Salesman to Factory for Sales

TrainingTraining•• Secured First Foreign Order Secured First Foreign Order -- 19971997•• We Had “Lift Off,” We Had “Lift Off,” •• But not much Altitude (Profit)But not much Altitude (Profit)

Focusing on the Far EastFocusing on the Far East•• Visited Hong Kong and Taiwan Every Other Year from Visited Hong Kong and Taiwan Every Other Year from

1998 to 20031998 to 2003•• Then Every Year from 2004 to PresentThen Every Year from 2004 to Present•• Attended Trade Shows with Hong Kong RepAttended Trade Shows with Hong Kong Rep•• Hong Kong Orders Came SlowlyHong Kong Orders Came Slowly•• And at Low Margins (Continued to “Buy” Market)And at Low Margins (Continued to “Buy” Market)•• Found “New” Competitors in Hong Kong and TaiwanFound “New” Competitors in Hong Kong and Taiwan––

Not US ManufacturersNot US Manufacturers•• Competitors Were Established, New Battles to FightCompetitors Were Established, New Battles to Fight•• But “Made in USA” Label Allowed Us to Get a Foot in the But “Made in USA” Label Allowed Us to Get a Foot in the

DoorDoor•• But Competitors Kept Prices and Margins LowBut Competitors Kept Prices and Margins Low

Then We Got OrganizedThen We Got Organized•• Created an International Marketing PlanCreated an International Marketing Plan•• Methodical Attack Methodical Attack -- Defined Prime International Defined Prime International

Market Criteria:Market Criteria:–– Cold Climates Cold Climates –– No Domestic CompetitionNo Domestic Competition–– English Spoken, PreferredEnglish Spoken, Preferred–– Dollar is ”Weak” Dollar is ”Weak” –– “English Measurement System” Okay vs. “Metric”“English Measurement System” Okay vs. “Metric”

•• Conducted Market Studies of Candidate CountriesConducted Market Studies of Candidate Countries•• Identified Prime MarketsIdentified Prime Markets•• Then … Then …

“Every Business Plan is Perfect “Every Business Plan is Perfect Until It Meets the Market “Until It Meets the Market “

•• China Called …China Called …•• In November, 2003 Contacted by Largest In November, 2003 Contacted by Largest

Chinese Pool Contractor Seeking a Dehumidifier Chinese Pool Contractor Seeking a Dehumidifier Partner for 2008 OlympicsPartner for 2008 Olympics

•• China Did Not Meet Many of Our International China Did Not Meet Many of Our International Business Plan Criteria,Business Plan Criteria,

•• … Oh Well.… Oh Well.•• We Were Requested to Made Presentation to We Were Requested to Made Presentation to

Chinese Government Olympic Committee Chinese Government Olympic Committee --February 2004 February 2004

PoolPak InternationalPoolPak InternationalPoolPak PoolPak

国际公司泳池室内环境彻底解决国际公司泳池室内环境彻底解决

•• My Entire Presentation My Entire Presentation Translated into MandarinTranslated into Mandarin

•• First Experience with First Experience with Simultaneous EnglishSimultaneous English--Chinese Chinese TranslatorTranslator

… China Called (Cont.)… China Called (Cont.)•• Effort did not get Olympic Orders, But Convinced China Partner, Effort did not get Olympic Orders, But Convinced China Partner,

PoolPak was Committed to RepPoolPak was Committed to Rep•• Rep Could Not Sell PoolPak at US PricesRep Could Not Sell PoolPak at US Prices•• We Gave Rep Special Low Pricing in Exchange for Minimum Sales We Gave Rep Special Low Pricing in Exchange for Minimum Sales

Quota with Penalty for 2005.Quota with Penalty for 2005.•• Rep Met 2005 Sales QuotaRep Met 2005 Sales Quota•• Rep Purchased, Stocked and Sold 100’s of our Smaller Residential Rep Purchased, Stocked and Sold 100’s of our Smaller Residential

& Hotel Pool Dehumidifiers& Hotel Pool Dehumidifiers•• Exhibited at International HVAC Shanghai Trade Show in 2005, Exhibited at International HVAC Shanghai Trade Show in 2005,

2006, 2007 & 2008, to get Exposure to HVAC Engineer Community2006, 2007 & 2008, to get Exposure to HVAC Engineer Community•• Rep Could Not Break Through with NonRep Could Not Break Through with Non--Stocked Larger Pool Stocked Larger Pool

Dehumidifiers Dehumidifiers •• Lead Time and Price were Problems.Lead Time and Price were Problems.•• Chinese were willing to Pay a Little More for US Manufactured Chinese were willing to Pay a Little More for US Manufactured

Products, but not if they had to pay too much of a premium and the Products, but not if they had to pay too much of a premium and the lead time was too long.lead time was too long.

•• We’re Working on That.We’re Working on That.

In The Mean Time, The Middle East BeckonedIn The Mean Time, The Middle East Beckoned•• Who Would Ever Thought They’d Build Indoor Pools in One Who Would Ever Thought They’d Build Indoor Pools in One

of the Hottest Places on Earth!of the Hottest Places on Earth!•• Again, the Middle East Did Not Satisfy our Marketing Plan Again, the Middle East Did Not Satisfy our Marketing Plan

CriteriaCriteria•• Attended Major HVAC Trade Show in 2005, 2006 and 2007Attended Major HVAC Trade Show in 2005, 2006 and 2007•• The Indoor Pool Dehumidification Market is HugeThe Indoor Pool Dehumidification Market is Huge•• The US Name was GoodThe US Name was Good•• Hired International Sales Manager of Middle Eastern Hired International Sales Manager of Middle Eastern

Descent with 15 Years of US HVAC Sales Experience Descent with 15 Years of US HVAC Sales Experience 2006.2006.

•• Located Sales Manager in Cairo.Located Sales Manager in Cairo.•• He Set up Rep Offices in UAE, Bahrain, Egypt, Lebanon, He Set up Rep Offices in UAE, Bahrain, Egypt, Lebanon,

Oman, Kuwait, Saudi ArabiaOman, Kuwait, Saudi Arabia•• Securing Orders for Burj Dubai and Palaces of Royal Securing Orders for Burj Dubai and Palaces of Royal

Families in UAE.Families in UAE.•• Margins are less Than Those in US, … but getting better.Margins are less Than Those in US, … but getting better.

PoolPaks Are Now Installed in PoolPaks Are Now Installed in the Following Countries the Following Countries

––CanadaCanada––ChinaChina––South KoreaSouth Korea––EgyptEgypt––JapanJapan––AustraliaAustralia––Saudi ArabiaSaudi Arabia––United Arab United Arab

EmiratesEmirates

––SpainSpain––LatviaLatvia––RussiaRussia––TurkeyTurkey––ChileChile––ArgentinaArgentina––UruguayUruguay––BermudaBermuda

We Have Over 4000 PoolPak Products Installed Worldwide

Lessons LearnedLessons Learned

•• Small Companies Like PoolPak Cannot Afford Small Companies Like PoolPak Cannot Afford Massive “International Marketing” Assaults. Massive “International Marketing” Assaults.

•• Have to Take Low Cost RoadHave to Take Low Cost Road•• You Have to Take Your Company to the Foreign You Have to Take Your Company to the Foreign

Market, It Won’t Beat a Path to Your DoorMarket, It Won’t Beat a Path to Your Door•• Must Establish Sales Reps in the Foreign Country Must Establish Sales Reps in the Foreign Country --

Don’t Expect Success Via CorrespondenceDon’t Expect Success Via Correspondence•• You Have to Develop “First Name” Relationship with You Have to Develop “First Name” Relationship with

Your RepsYour Reps•• They They DON’TDON’T speak English “over there.”speak English “over there.”

… Lessons Learned… Lessons Learned•• Our Foreign Reps MUST Get Factory TrainingOur Foreign Reps MUST Get Factory Training•• Margins in the Early Stages Will be CompetitiveMargins in the Early Stages Will be Competitive•• Become Really Knowledgeable About International Become Really Knowledgeable About International

Letters of Credit, Trade Terminology, … Or You Letters of Credit, Trade Terminology, … Or You Won’t Get Your Money.Won’t Get Your Money.

•• Make Sure Your Bank has Foreign Trade ExpertiseMake Sure Your Bank has Foreign Trade Expertise•• Be Really Flexible, Agile and Respond Quickly to Be Really Flexible, Agile and Respond Quickly to

International OpportunitiesInternational Opportunities•• And …And …

Enjoy The Journey …Enjoy The Journey …

Sightseeing

Interesting Food Shopping

… Enjoy The Journey (Cont.)… Enjoy The Journey (Cont.)

ThanksThanksQuestions?Questions?