PART V MARKETING U.S. PRODUCTS AND SERVICES Introduction As a small open economy which is heavily dependent on trade, the introduction of products into the Irish market is uncomplicated. Standard international marketing and distribution practices are widely utilized in the Irish market. Motivated U.S. firms with quality products will encounter positive assistance from their local representative in achieving their goals and objectives for the Irish market. Distribution Methods Product representation throughout the country is facilitated by the compact market and may be achieved with any of the following distribution methods to cover the entire area, depending on the expected sales volume and marketing techniques: (a) Establishing a local sales office to serve Ireland and provide a distribution point for Western Europe. (b) Selling through an agent or distributor whose activity may cover specified areas, the entire country, or include European sales (c) Selling through established wholesalers or dealers (d) Selling directly to department stores, chains, retailer cooperatives, consumer cooperatives, or other purchasing organizations. Distribution methods differ with the product and with the individual situation, and they must be tailored to fit the particular market conditions in each instance. U.S. companies can use their experience in successful distribution techniques in the United States as a good guide for approaching the Irish market. Generally, consumer goods are best sold through a distributor carrying stocks for immediate delivery and sale, whereas capital goods and industrial equipment are most effectively handled through a commission agent. In the case of certain raw materials with low mark-ups and for capital goods and supplies for which there are limited numbers of potential users or buyers, direct selling probably will be most effective. The U.S. exporter would be ill-advised, after having appointed a representative firm, to provide only product literature and samples and then expect to achieve good sales results. Regular communications and visits to the representative, particularly when newly appointed, by seasoned sales personnel or company technicians can provide information on market developments and assist in the solution of any problems. Regular submission of sales reports can be a vital link to analyzing sales results and identifying potential problems before serious one occurs. Irish business people purchase from international sources and expect well-designed, high-quality, with efficient after-sales service. Thus, an effective servicing system also should be incorporated into distribution plans. Appointing an Agent or Distributor As Ireland presents a compact market, international firms customarily have one exclusive representative for the entire country, but it is common for the representative to appoint subagents to cover certain sectors of the market if sales and profit margins warrant. In addition, a sales representative located in Ireland is in an ideal position to market a product throughout the European marketplace. Frequently, U.S. firms will also rely on the Irish distributor to handle the details of labeling and packaging for European preferences regarding the product. The careful selection of a dynamic representative is important for successful sales over the long term. The selection of a good sales representative is also essential because EU legislation is restrictive regarding the termination of agents and distributors. The Council Directive EEC 86/653 sets forth conditions on termination of a commercial agent and provides for appropriate compensation. In addition, Irish legislation protects the interest of distributors. Before entering into any agreement with a partner, the American principal should first review the provisions of Irish and EU law with a qualified attorney. The legislation regarding unilateral termination of distribution agreements is designed to provide the local distributor with some degree of protection and monetary compensation when an agreement is terminated by the grantor, for reasons other than cause. The legislation will apply regardless of any clause in the agreement itself, and the parties may not deviate from the legislation as long as the distribution agreement is in force. Three kinds of distribution agreement are covered by Irish legislation: (a) Exclusive distributorships, where the distributor has the sole right to sell specified goods within a defined area. (b) Quasi-exclusive distributorships, where the distributor sells almost all the specified products within a defined area. (c) Informal distributor arrangements under which the grantor imposes heavy obligations on the distributor and which would cause damage to the distributorship if the grantor terminated the agreement. In the absence of a mutual agreement, or the failure to meet contract obligations, a distribution agreement of indefinite term cannot be terminated by the grantor without reasonable notice or fair compensation. In general, grantors should consider protecting themselves by entering into agreements for definite periods rather than an indefinite period. In addition, specific minimum performance clauses should be considered, such as percent of distributor's sales, minimum annual sales, number of business contacts to be made, etc., and proposing that foreign law and a foreign forum have jurisdiction. EU Legislation on Agents Under EU legislation, a commercial agent is a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, or to negotiate and conclude such transactions on behalf of the principal. Each party is entitled to a written document setting out the terms of their contract. The minimum termination notice is one month for the first year of service, two months for the second year, and three months for the third year and subsequent years. Agents must be compensated if they brought the principal new customers or increased the volume of existing business. The amount of indemnity may not exceed a figure equivalent to an agent's annual remuneration over the preceding five years or the average of the period in question. The indemnity is not payable if the principal has terminated the contract because of default by the agent or if the contract is terminated on grounds of age, infirmity, or illness of the agent. The local district offices of the International Trade Administration of the U.S. Department of Commerce offer an Agent/Distributor Service (ADS) to help U.S. firms find agents or distributors in Ireland and other countries. Manufacturers seeking an Irish agent to service the domestic and European market ideally should visit Ireland to make an appraisal of the relative merits of prospective agents. Besides acquainting the U.S. exporter directly with local market conditions and special sales characteristics, a visit also provides an opportunity to discuss policy and sales campaigns with the agent, review responsibility for customs fees, taxes, labeling, business procedures, and payments. These responsibilities should always be clearly defined before undertaking a long-term relationship. A continued close working contact between the American firm and the agent or distributor is very desirable and should be developed early in the relationship. Certain products and equipment require servicing to maintain their useful life. The U.S. exporter should determine if this is needed and develop a distribution network to include such servicing by qualified personnel. To build trust, loyalty, and marketing skills, U.S. producers frequently bring their agents or distributors to the United States for training and marketing assistance. Wholesale and Retail Channels According to the latest retail census, there are some 34,000 retail and 2,500 wholesale outlets in Ireland. The distribution system, especially at retail level, still consists of small outlets by American standards. Nevertheless, the Irish distribution system is moving toward larger, more economically viable units to meet changing market needs. The increasing tempo of commercial and industrial development, as well as suburban development, is bringing about changes in the distribution system. Wholesalers supply a variety of services to associated small retailers, including sales promotion, advertising, and retail training. In some cases, they combine as a group to purchase from manufacturers and then distribute the goods to their customers. Retail outlets in Ireland range from the large department stores to the small shop owned and operated by an individual. Although most retail outlets are small, such enterprises are decreasing in number as efficiencies of scale and purchasing power become the major competitive factors bearing on profit margins. A trend toward larger outlets has been underway, with the formation of chains, expansion of department stores, establishment of medium-sized department stores, and the development of chain stores under single management. Discount firms, especially those handling consumer electronics and domestic appliances, are still increasing, and the number of self-service stores is rising steadily. Self-service is not confined to small merchandising units as department stores and gas stations also have incorporated this sales technique in their operations. There is increased acceptance of the retail franchising concept by the Irish business community and consumers. This form of marketing now represents some 7 percent of retail sales and is growing rapidly. Franchising has been on the increase due to changes in consumer buying patterns, the spread of suburban living, greater affluence, and the increase in the number of working women. There are few regulations concerning franchising and none that limit market access to U.S. firms. The EU has issued Regulation 4087/88 EEC regarding franchising which provides a unified code for the 12 member states. Its main thrust concerns price fixing, transfer pricing, non- competition clauses, and exclusive dealing. It also exempts certain franchise agreements from the EU anti-trust regulations. Mail-order sales account for a very small part of total Irish retail sales. Certain firms have used this technique successfully in combination with their usual retail outlet operation. Promotion is carried out by catalog, or by newspaper advertisements with no personal contact. Hobby centers, Do-It- Yourself, auto supply centers, and discount stores also are enjoying great success. The Irish retail trade is very receptive to new food ideas and is constantly monitoring developments in new products in the international marketplace. When sourcing new products, the major retail chains often use specialized importers to handle the logistics of importation and distribution as few chains import directly. As a result, there is a large number of food importers, many of whom are quite small, serving the retail trade. Some of these importers are also distributors of Irish produce and indeed some also are local manufacturers. Most importers/distributors have adequate distribution facilities to most parts of Ireland. There are over 10,000 food outlets of varying sizes in Ireland. The food retail sector is dominated by three multiple chains, while another two smaller chains also operate. These multiples dominate the grocery trade in the Greater Dublin Area accounting for about three quarters of retail sales. Outisde of the main urban areas, groups of independent grocers "symbol groups" operate. These retailers buy from a central purchaser and are particularly strong in rural Ireland. Advertising A full range of advertising media is available in Ireland. The two national radio stations and two national television stations broadcasting in Ireland are the monopoly of Radio-Telefis Eireann (RTE), a state-owned corporation. There are also a large number of private radio stations operating in local areas. The Irish cable television system is available in urban areas with about one-third of the population having cable service, another third having multi-channel service, which includes British TV transmissions, and the remaining one-third receiving only RTE television programming. RTE has a code of standards, established by the Advertising Standards Authority of Ireland, with which all advertisers must comply. Advertising films must be approved before showing. Detailed advertising rates can be obtained from RTE, Advertising Sales Division, Donnybrook, Dublin 4 and most local advertising agencies. Ireland has approximately 60 newspapers and 150 periodicals or trade magazines. The Dublin dailies are the only newspapers having national distribution. There are three daily morning and two daily evening papers published in Dublin. The Irish Independent (morning) has the largest circulation, followed by the Evening Press and Evening Herald. The Irish Times (morning) has the smallest circulation in Dublin, but reaches the important business and finance market. There are five national Sunday newspapers. British broadsheets and tabloids are widely available in Ireland. A listing of the major newspapers and business journals is contained in Appendix C. The principal advertising media are the press (35%), television (41%), radio (16%), and outdoor (8%). Cinema is primarily a support medium with a strong reach among the 15-24 year olds. There are numerous advertising agencies with a wide range of services. The large ones provide a full range of advertising services and are members of the Institute of Advertising Practitioners, which is closely associated with the American Association of Advertising Agencies (AAAA). Advertising agencies utilize every medium available to advertisers: direct mailings, press, radio, television, point-of-sale advertising, posters, and public transportation placards. Other promotional techniques, such as coupons, samples, premiums, and prizes, are also used. Laws covering gaming and lotteries as well as restrictive trade practices are strictly enforced by the government. Firms advertising and selling goods should obtain local advice regarding provisions of the laws and consumer accpetance of the promotional or marketing approach. The names of Irish advertising agencies, market research organizations, and management and public relations counseling firms may be found in such publications as the "International Directory of Market Research Houses and Services", American Marketing Association, 420 Lexington Avenue, New York, NY 10017, phone: (212) 687-3280, and the "Directory of Marketing Research Agencies and Management Consultants in the United States and the World", Bradford, P.O. Box 276, Fairfax, VA 22030, phone: (703) 560-7484. Firms engaged in market research in Ireland are all headquartered in Dublin. These firms provide the usual range of services, including store audits, consumer surveys. product field testing, attitude and motivation research. In general, if the advertising technique works well for a product line in the United States and elsewhere in Europe, the Irish market also should be receptive to the theme. There are differences, however, and local opinion should be obtained first for a specific strategy that calls for a major commitment of resources. Trade Fairs Due to the proximity of Ireland to major trade shows in European cities, the Irish trade fairs tend to attract a more local trade and consumer buying audience. Most Irish business people attend the major European and U.S. trade shows. Thus, U.S. pavilions at European trade shows are very likely to receive Irish visitors. Pricing Product Sales quotations are usually given on a c.i.f. basis. This is the sales price plus costs, insurance, and freight to point of importation. The c.i.f. quote is generally preferred by Irish importers as they are usually familiar with the customs charges and taxes on the product that are levied at the time of importation, but may not be acquainted with U.S. trucking and ocean or air charges. Large firms and department stores, however, sometimes buy on f.o.b. terms when they prefer to arrange for shipping and insuring the goods themselves. Quotations and invoicing are usually in terms of the currency of the country of origin. Selling to the Irish Government As a member of the EU, Ireland had adopted the Community's public procurement Directives. All Irish works, supply, services, and utility procurement projects which fall within the guidelines of the EU public procurement Directives are published in the Official Journal of the European Union "S" series. U.S. firms with operations in Ireland report no problems in their efforts to sell to the Irish government. Registration of Patents, Trademarks, and Designs Ireland has legislation for the protection of patents, trademarks, and industrial designs. It is a member of the Paris Union, which adheres to the International Convention for the Protection of Industrial Property. Applications for patents, registration of trademarks, and for design protection should be filed with the Irish Patent Office, Department of Enterprise and Employment, 45 Merrion Square, Dublin 2. Inventions may be patented for a 20-year period. Trademark registrations are valid for 7 years and are renewable for 14-year periods. European Patent Convention Ireland is a signatory to the European Patent Convention, which provides for a centralized European-wide patent protection system. The European Patents Act of 1992 and Patent Cooperation Treaty updated national law in a number of respects and the substantive law is in line with that of other European countries who have harmonized their laws on the basis of the European Patent Convention. The European Patent Convention has simplified the process for obtaining patent protection in the EU member states. Under the European Convention, an applicant for a patent is granted a preexamined 20-year, non-renewable European patent that has the effect of a national patent in all 16 countries that are signatories of the convention, based on a single application to the European Patent Office. It also contains a provision for the garnting of short term patents (half the duration of the normal patent) in the interest of small/medium innovators. This procedure should expedite the granting of patents. However, infringement proceedings remain within the jurisdiction of the national courts, which could result in some divergent interpretations. For information, write to the European Patent Office, Motorama-Haus, Rosenheimer Strasse 30, Munich, Germany. Copyrights Both Ireland and the United States are signatories of the Universal Copyright Convention, which provides for mutual copyright protection. In Ireland, protection is provided by the Copyright Act of 1963. Ireland is a member of the Berne Convention, which forms the International Union for the Protection of Literary and Artistic Works. Copyright protection in Ireland is generally considered to be good. However, there are some industry concerns that the penalties for infringement of copyrights on video tapes and computer software are not sufficiently severe to curb pirating. A review of Irish copyright legislation is pending as a result of, inter alia, developments in the EU. In that context, the government may consider stronger penalties for copyright infringement.