V. MARKETING U.S. PRODUCTS AND SERVICES Distribution and Sales Channels: Foreign goods generally are imported through Casablanca by companies that distribute either directly to the public or to other wholesalers, distributors, or retailers. Mark-ups can be substantial, although curent price controls tend to keep them lower for many market staples. Goods may also be imported through commission agents for delivery to wholesale and retail warehouses or to end-users. The agent's commission usually represents 3-5 percent of the cost, but it can be higher. Ordinarily, locally manufactured products are distributed by the manufacturer directly to wholesalers, distributors and retailers. This system, driven by strong price competition, eliminates certain middlemen and helps to maintain competitive pricing. Manufacturers' mark-ups range between 20 and 30 percent depending on the product; those of distributors from 10-25 percent. Most of the wholesale and retail commercial enterprises in Morocco are family-run businesses which perform a variety of commercial roles, depending upon the commodity and buyer concerned. Use of Agents/Distributors; Finding a Partner: All foreign manufacturers and exporters are represented in the market either through their own affiliate branch office or through authorized agent/distributors who import, install and service the equipment. These distributors customarily provide total technical support to end users. Certain locally registered agent/distributors with long-term business relationships with foreign manufacturers have contractual arrangements with their principals under which the local importers provide in-bond warehousing. These arrangements are beneficial and new-to-market U.S. exporters are urged to consider similar agreements. Franchising: The recent opening of a McDonalds Restaurant in Casablanca and 4 Pizza Huts have proved successful. There is ample room for other fast food chains. One influential contact in the food business has expressed interest in a "Dunkin Doughnut" operation. Wendy's and Dairy Queen are negotiating to open in Morocco. Activities offering additional franchising opportunities in Morocco may include hotels and motels, automotive parts and services, dry cleaning business equipment and services. A USAID program currently assists in arranging master franchise agreements between U.S. franchisers and local master franchisees. Direct Marketing: This selling method is allowed in Morocco. Avon and several other French companies employ Moroccans primarily for direct sales of cosmetics and household goods. Joint Ventures/Licensing: Moroccans are increasingly interested in joint venture business operations. There are an estimated 1,500 joint ventures in manufacturing with French, Spanish and German partners. Licensing is a very common form of doing business in Morocco. Over 250 U.S. pharmaceuticals are produced under license in Morocco, in addition to popular U.S. beverages and some snack foods. EU firms dominate the licensing market with vehicle assembly, clothing, pharmaceuticals and cosmetics. Steps to Establishing an Office: The Commercial Code freely permits the establishment, extension or merger of firms. The only formaliites required to form a company consist of entering the statutes with the Secretariat of the Court of First Instance and in the Commercial Register kept by the Court. As in the United States, a person may create or purchase a business without incorporating. The owner of such a sole proprietorship has responsibility for all operations, transactions, and debts incurred. Selling Factors/Techniques: Most local distributors of imported merchandise expect their suppliers to provide substantial advertising and promotional support, particularly when introducing a new product or brand name. Sales promotion material and technical documentation should be in French. Clear and simple French-language operating instructions, displays of the product in use, sample handouts and frequent personal visits are vital for successful sales in Morocco. Morocco is also sensitive to prices, which are a key selling factor. Advertising and Trade Promotion: While a number of adverstising agencies operate in Morocco, most do not provide the number of services an American seller would come to expect. Media advertising is well developed. Of the various mediums, newspaper and magazine advertising is most commonly used and French language papers have the largest business readership. Leading daily papers published in Casablanca in French include "Le Matin", "Maroc Soir", "l'Opinion" and "Al Bayane". "La Vie Economique" and "l'Economiste" are widely-read business economic weeklies. In addition, specialized trade and industry journals are published by several local industry groups. Commercial time is available on the government-owned and the lone private chanel television service in 10 to 60 second "spots" usually repeated 2 or 3 times daily. The most common advertisement is the 30 second spot. Advertising is prohibited on the government-owned radio. However, commercial time is available on Tangier-based French broadcasts which reach the entire Maghreb. Radio advertising has proven very effective and next to newspapers is the medium of choice for most consumer goods. Direct mail is also becoming more common and a new firm now offers aerial-banner advertising. Street posters offer an important advertising medium for consumer goods in Morocco. Fast moving consumer product companies sometimes use sound trucks to advertise, particularly in remote areas. Pricing products: The control of prices apply only to goods considered basic essential commodities, e.g., sugar, bread, milk, cereals, oil, and gasoline. In most other cases, prices are freely determined and the government may only intervene under limited circumstances. Sales Service/Customer Support: U.S. firms are urged to provide the following services to their local agent/distributors: Readily available back-up service provided by manufacturer-trained local technicians and engineers. User oriented products suited for local conditions. Partnership agreements with local firms which provide expertise on local trading conditions and warehouse equipment and spares. Product information in French is vital in Morocco. The end users' support staff is often ill-trained and prone to mishandle equipment if they don't receive detailed instructions and are not provided with comprehensive manuals. Major competitors often have agreements with local importers/ distributors to share costs for local and factory technical training programs. U.S. firms need to offer similar services if they are to be fully competitive in Morocco. Selling to the Government: Sales to the GOM are made through direct negotiations or Foreign Government tenders. The most common way is through tenders. The public sector has three categories of projects: Minor, Medium and Major. Medium and Major projects are open to international firms. Major projects are usually guaranteed by an international financial entity. There are many major projects for which studies have been made but cannot be implemented for lack of financing. There is no central purchasing bureau and no tendering authority. Ministries and state owned enterprises issue their own tenders and deadlines vary from 30 to 90 days depending on the complexity of the project. Government tenders are published in local newspapers and copies are sent to embassies for dissemination. Copies of those tenders are sent by cable to the U.S. Department of Commerce. Tenders are printed each day in the Commerce Business Daily. All bidding documents are in French. They provide the technical requirements and the administrative clauses common to all government projects. A bidder's administrative package should include two copies of a statement of honor indicating the name, address, activity, current account number and bank guarantee. The technical package should include technical and human resources of the company and its references. The proposal must be in French and use the metric system.