Clients often ask, “How do I expand my business into overseas markets?”
In fact, there are a number of exciting, high-potential options available, both for entry and for growth.
But first, it’s important to separate facts from myth; for global business in general, and international markets expansion in particular. Here are the top three myths about going global that people seem to believe:
1. “We should start in a foreign market that speaks the same language as us.”
This logical comment came from a U.S. client of ours with a new product intended for Emerging Markets.
He was referring to his plan to use the United Kingdom as a global launching pad, largely because it has been designated as a pre-dominantly English-speaking country (like the U.S.).
However, at that time, the American dollar – British pound exchange rate was more than 2:1.
This meant that any launch event, as well as general operations there, would have cost more than twice as much as the same efforts here in the United States, and many times more than what it would cost in his target markets.
Canada might also have been a strong candidate, with the English correlation, and (usually) a better exchange rate.
Ideally, however, a pilot or launch would be conducted in an Emerging Market country in order to replicate the conditions anticipated in the primary market(s), and happily reduce costs.
2. “Africa [North America, etc.] is a largely populated market. With all those people, we’ll make a killing in sales.”
One of the most compelling and important aspects of international and domestic marketing strategy is segmentation. It makes otherwise small markets “big” and sometimes renders big markets small.
When segmenting any potential new market, it is important to be data-driven, by performing a series of research exercises and analyses.
Doing so will yield target markets, segments and niches that, when penetrated with incisive strategies and tactics, yield a high ROI (return on investment) and build a a sustainable revenue base over time.
We see this in smaller business-to-business clients who tend towards business-to-consumer thinking.
In large markets, access and purchasing power are also key considerations, in addition to adroit segmentation.
South African major supermarket chain Shoprite leveraged these critical aspects when, in the 1990s, it began offering funeral coverage services in addition to standard goods, and bus and air tickets.
Although it suggests the maxim, “shop till you drop!” could have a whole new meaning, it was a logical strategy for reaching a mass market with transportation and financial challenges, via partnerships with insurance providers.
Shoprite has been voted the #1 Supermarket in South Africa, according to their corporate site, since 2006.
3. “A success in one market, a success in all markets.”
An overseas client of ours, who had been wildly successful in their domestic market with a technology device, expected that when they opened shop in Silicon Valley, the local red carpet would be rolled out for them.
Unfortunately, while they had researched their own market with its culturally driven norms and constraints quite well, they just assumed their widget would be the darling of “Tech Worldwide HQ”. Thus, they arrived uninformed and ill-prepared.
The unique selling proposition that set their home market ablaze overseas was not only irrelevant here; it was deemed deplorable.
Worse still, they arrived with virtually no marketing budget to compete with U.S. startups, in the same space and on their home turf. We continue to wish them well.
Worth the prep
International markets development is not only possible; it is ultimately essential for most businesses who want to lead markets, securing sustainable brands and revenue streams.
That said, success will be awarded only to those who do their homework in depth; formulate and execute exceptionally well on incremental, highly strategic plans; and remain watchful and agile in order to course-correct and/or build upon well-considered metrics, pilots and plans.
So, for those willing to put in the effort, Global Business success awaits…let’s go!
What other popular myths are out there about going global?