Commercial Agents and the Greek export businesses’ growth
Commercial Agents, influencers, brand ambassadors: their contribution to the Greek export businesses’ growth
1. Greece today, after the last Economic Adjustment Program
2019 seemed to not only be the start of a new beginning for the Greek economy, but also a year full of challenges. The conclusion of the last three-year economic adjustment program, as well as the disambiguation of Greece’s advanced surveillance regime for the period following the program, are both factors that could lead the Greek economy into a new statutory framework.
Nonetheless, whereas, in 2018, the consistent achievement of a 1,8% rate of growth of the Gross Domestic Product aided the recovery of the Greek economy, a hamper is expected in 2019. Internal political developments along with, on the one hand, the uncertainty regarding the persistence on the structural reforms and, on the other, the consecutive elections, are among the contributing factors.
Furthermore, the external economic environment is also negatively affecting the country’s economic growth potential. Indeed, since the strengthening of the outward-looking Greek economy has been a major factor attributing to the recovery of the Greek economy, the hampering of the economic growth on an international level and, more precisely, in the eurozone, and the consequent restrictions of world trade, because of the tightening of the protectionist practices, are most likely to act as retarding agents to the growth of Greek economy.
2. The outward-looking Greek economy as a foundation for a sustainable growth model
In any case, and regardless of the country’s economic growth rate in 2019, the Greek economy has to transit to a viable growth model, based on knowledge, entrepreneurship and investments. In order to achieve that, it is necessary, among others, to continually improve the country’s exporting performance. It is not coincidental that what drives the growth of the Greek economy is the dynamic turn of Greek businesses towards foreign markets. In this context, it would not be an exaggeration to highlight that, during the years of the economic crisis, the increase of exports is probably the only noteworthy positive element of the Greek economy.
Conversations regarding the further development of the outward-looking Greek economy are usually focusing on matters regarding the competitiveness of Greek businesses, as well as the requirements to, on the one hand, incorporate new technologies in the corporate bodies and, on the other, significantly invest in knowledge (education, research, innovation). None of those conversations refer to the significant attribution a proper specialization of exports per product or service and region could have towards boosting the exporting activity of Greek businesses, a phenomenon which is the stimulus of the present memorandum.
3. The, yet, insufficient improvement of Greek companies’ exporting activity
When studying the country’s exporting performance and assessing the development of the market shares of exporting Greek goods (and services), it is generally accepted that Greek exporting companies usually offer products and services of exceptional quality to the international markets. That very exceptional quality is their main advantage in an environment of global competition.
Nonetheless, these products (and services) have a cost disadvantage, as:
- foreign competitors are bigger and better organized – the small (size-wise) Greek labor, the small internal market and the inability to achieve scale economies render Greek products (and services) -at least those that are offered by labor-intensive businesses -insignificant in quantity when compared to global competitors,
(b) Greek businesses are fighting against extremely high tax and social insurance obligations, as well as a significantly high labor cost (despite the adjustments forced since 2010),
(c) Greek businesses do not have access to bank lending or at least to cheap bank lending.
Furthermore, Greek entrepreneurship has not yet incorporated in its everyday practice the culture of cooperation, resulting in its inability to counterbalance its cost disadvantages.
Concluding, the following paradox often appears: despite that Greek entrepreneurs or producers are solely interested in the production of a specific, qualitatively exceptional product (and service), they are completely disinterested in the essence of entrepreneurship and trade. This means that they have no interest in whether and in what way their product (or service) can become known to the end consumer, distributed to the market for which it is intended and, in the end, get sold.
For these reasons, it is found that the current improvement of the outward-looking Greek economy is far inferior to the exceptional quality of Greek goods (and services) exported. Furthermore, the question on how Greek exporting businesses can augment their shares in the global market with the limitations on internal funding and the long-term investment in knowledge in place still remains.
4. The contribution of commercial agents to the distribution of products (and services) in a specific region
According to the abovementioned, the conversation regarding the improvement of the outward-looking Greek economy has not focused, among others, on the need to properly specialize exports per product (and service) and region, meaning on the need to properly match them. Consequently, all conversations around the topic of the improvement of the exporting activity of Greek businesses disregard the decisive influence a specific person could have on distributing a product (and a service) to the targeted markets and, eventually, get it sold. This means that all relevant conversations disregard the key contribution of a commercial agent.
In a nutshell, a commercial agent could be described as the person that takes on, as an intermediary and on a permanent basis:
(a) negotiations on behalf of other persons (natural or legal), persons that are called principals (the present memorandum only focuses on Greek exporting businesses), the sale or purchase of goods or services and
(b) depending on the context of the agency agreement, the conclusion of those transactions in the name of the principal.
In this regard, it could be stated that in an agency agreement Greek exporting business acting as principals entrust, in exchange for a fee, on a permanent basis to an independent businessman, the commercial agent, the administration of all their cases with the abovementioned content, (usually) taking place in a specific region.
Thus, it can be deducted, from the (abovementioned) general content of an agency agreement, that a commercial agent can place the products (and services) offered by Greek exporting businesses for the first time in the region the commercial agent operates, or strengthen a business’s market share in said region. This way commercial agents decisively contribute to the improvement of the outward-looking Greek economy.
5. Greek exporting businesses perspective – what is required from an up-to-date commercial agent
In this regard, in order for Greek exporting businesses to place their products (and services) in a specific region or to increase their market share in it, the contribution of a modern-day and competent commercial agent is deemed necessary. The latter has to adequately respond to the, mentioned above in great detail, business and exporting environment, as well as to the needs and requirements of Greek businesses.
To be more precise, Greek exporting businesses require from a modern-day commercial agent to promote and protect their interests and to act according to good faith. Specifically, all Greek exporting companies need a commercial agent who:
(a) consistently monitors the market of the region they have taken on (monitoring) and adequately tracks all of the product’s (and service’s) distribution channels, which they have taken on (tracking) -nowadays only addressing “friendly” distribution channels is considered as inadequate,
(b) to adopt the vision, strategy and goals of their principal
(c) to understand that they are an integral part of the structure of the sales department of their principal and to collaborate closely with all persons working in that department,
(d) to protect, promote and improve the principal’s image, not only the one the distributing channels of the region have, but also the one the end consumer-the general public of the region they operate in have as well. In other words, fostering good personal relations with the persons that constitute the distributing channels is not enough, since nowadays the systematic use of social media and direct influence of the end consumer is necessary,
(e) to care for the cultivation of long-term business relations between the principal and with the ones the latter transacts (wholesale dealers, distributing channels, retail dealers and end consumers) and add value to the principal,
(f) make the needs, demands and wishes of all parties involved in the business explicitly and clearly known,
(g) make all information they have and which relates to the principal, to the latter’s products (and services) and to the region known to the principal and
(h) not represent other products or services that are directly competing to the ones offered by the principal in the region.
6. Influencers, brand ambassadors and promoting awareness of a brand, a product and a service.
In addition to the abovementioned, it is more than clear that a necessary precondition for the distribution of a product (and a service) to the market and for its sale to the end consumer is the business’s high brand awareness. That is why businesses have developed organized marketing departments and programs.
Nevertheless, the rapid growth of social media during the last decade seems to have reformed marketing methods, as it highlighted the importance of influence marketing. This type of marketing, which limits and content are both rapidly and, along with social media, evolving, is focusing on specific people. Those people, who are in a place to influence the end consumers, fall into the following categories:
(a) Influencers, who are the people that are in a place to influence the behavior, views and decisions of other people, because of their power, knowledge, place or relationship with the people they address. The influence they have is mainly built online and through social media, and their relations with businesses is relatively loose. They promote the products or services offered by the business they collaborate with, but they are not part of the business structure, since, most of the times, their services are used for short periods of time. It is obvious that they neither negotiate nor enter into agreements in the name of the principal.
(b) The brand ambassadors, who in a way are both influencers and commercial agents. They increase the principal’s brand awareness and sales, but do not negotiate or conclude agreements on their behalf. They use the internet and social media, but do not overlook physical social presence, interaction and influence. They may be part of the business entity, or an independent associate. In any case, their commitment to the business is stronger than the one influencers have and their commitment comes with longer lasting contractual relations.
7. The commercial agent as an influencer and brand ambassador
From all the above, it is clear that in the age of social media, internet, technology and speed, commercial agents, in order to promote the Greek exporting companies with which they collaborate, have to, simultaneously, be influencers and brand ambassadors for these companies and the products (and services) they are assigned with.
Modern day commercial agents have to systematically use social media and to influence the end consumers. At the same time, as already mentioned, they have to have physical social presence, interaction and influence. This is the only way they will be able to maintain, promote and improve their principal’s image before the distribution channels of the region in which they operate, and, also, before the public. At the end, this is the only way modern-day commercial agents will be able to place the products (and the services) of Greek exporting businesses in a certain region or increase their market share in in.
8. Conclusion – the role of the legal advisor in signing an agency agreement
In any case, introducing and extensively using influence marketing in commercial and business practices give the modern-day commercial agent new and diversified abilities for the representing of Greek exporting businesses – beyond and above the traditional practice of their activity. As a result, the services (of such a diverse range) offered to the principal, require the conclusion of a clear and explicit written agreement that will satisfy the needs, expectations and goals of the agent as well as the principal. In other words, the services of a qualified legal advisor are required.
P.S.: A brief version of this article has been published in Greek in MAKEDONIA Newspaper (July 21st, 2019).