14 minute read
MARKETING PLAN
CHAPTER 9
NOW THAT YOU’VE MADE IT THIS FAR , an obvious question jumps off the page: “Is there a foolproof way to avoid the kinds of mistakes made by the companies chronicled in this book?” The answer is no, as there is not now, nor will there ever be, a foolproof way to do anything. Without putting too fine a philosophical point on it, anything devised by human beings is inherently flawed; that is an immutable truth. It’s almost laughable to consider that one would need to convince mature and experienced businesspeople of the advantage—not to say the criticality—of taking a long, hard look at a potential overseas market before making the decision whether to do business there. But, alas, the examples in this book have shown otherwise. Suffice it to say, though, that if one approaches an international business deal—whether the first or fiftieth—after having studiously followed a clearheaded course of action, the possibility of committing the kinds of mistakes and blunders—big and small, innocent and almost deliberate—mentioned in this book will be proportionally reduced. Study hard, do your homework, ask questions—and take the answers to heart. Then, while everything may not go according to plan, at least you will have developed the kind of mindset to take it all in stride, follow with whatever corrective measures are necessary, and not lose sight of your ultimate goal. Quite literally, hundreds of schematic marketing plans have laid out, to a greater or lesser degree, the elements of a successful international marketing strategy. And while all of them differ in many ways, they orbit around the same core formed by a few immutable truths. That is, they may differ in detail, but almost all are identical in approach. This chapter builds on what a company anywhere and at any time can do to apply with practicality the lessons outlined in the preceding chapters.
The first step in constructing an international marketing plan free from the blunders that have stopped so many companies dead in their tracks is to make a detailed country or regional analysis.
The basic information you need to create such an analysis includes three elements: (1) an evaluation of the target market’s potential; (2) the identification of any problems or issues that might possibly eliminate the potential market from consideration; and (3) an evaluation to see whether any adaptation of your product or service is necessary to make it marketable.
THE COUNTRY NOTEBOOK According to Philip Cateora in his book International Marketing, many companies compile a “country notebook” for each country in which they do business. Each notebook should contain up-to-date information that a marketer should be aware of when making decisions about a specific country market. The information should be gleaned from as many sources as possible. Publications of all kinds—both international and those published within the target country or region—should be read on a regular basis. The Internet also provides an outstanding source of qualified information, from both public- and private-sector sources, that in many cases is updated daily. What to do with all this information? “Study it,” Cateora says. Whenever a marketing decision is made, he says, the country notebook should be the first source consulted. Keep an eye out for any conceivable issue that could impact the market’s business environment—from political and economic issues to information on both domestic and international competitors. Organizing country notebooks and cultivating useful sources of information is only the first step, however.
MARKETING STRATEGY Many international traders, particularly those new to the experience, make the common mistake of failing to seek qualified counseling to help them develop a marketing strategy that clearly defines their goals and objectives. They need a strategy that enables them to reach their goals despite whatever problems may arise during the process. The sources for useful information are almost limitless. Public-sector assistance is available from a variety of government agencies at national, regional, and local levels, while private-sector groups such as bilateral chambers of commerce, world trade centers, industry-specific trade associations, and other trade promotion entities can also provide very useful information on trade trends and developments. Also, many schools cooperate with government agencies to operate trade promotion and business development centers that offer both counseling and classes on a wide variety of topics for business executives and others interested in international trade.
The Distribution “Partnership”
Another element that must be carefully considered is the selection of overseas distributors and the crafting of a seamless distribution plan to get your product to market.
It usually takes much more time to establish a presence in a target market overseas than in a domestic one. This is where a long-range, long-term perspective proves invaluable: the initial costs in time, money, and manpower necessary to establish a foothold in an international market have often frightened away many neophyte global traders from what could have been a very worthwhile experience. This initial skittishness can be minimized by carefully monitoring your company’s efforts at every predetermined benchmark; stop, analyze, and make sure that every possibility has been taken into account.
The heart of this is determining the type of representation your company wants in the target market. Would it be best to hire someone on-site to act as a company representative—perhaps a native with invaluable language and cultural skills? Or would it be better to deal through an agent who represents a number of other similar products? Perhaps it would be best to assign a manager with international experience as an expatriate? Or would it be best to create a joint venture with an in-market partner to produce and distribute your product within the market itself?
While each has its own advantages and disadvantages, the decision on the type of distribution channel that is best for your company will have a tremendous impact on the way you structure your international effort. Some things to keep in mind are:
■ Your existing manufacturing operation’s capability to keep up with the increased demand that an overseas market will create; ■ Top management’s commitment to support an overseas operation as an equal to your firm’s domestic business; ■ Management’s ability to adapt to the unique needs that an international operation requires; and ■ Your company’s willingness to perform the due diligence that’s a crucial part of any global business transaction.
Determining the right type of relationship with the right overseas partner is crucial because, while your company may have an identity at home, more than likely it is an entirely unknown entity in your chosen target market. Thus, in all likelihood, customers in the foreign market will buy your product almost solely on the strength and reputation of your distributor. A personal evaluation of the person or persons handling your account is essential, as is a critical analysis of their facilities, management styles, and experience.
INTERNAL CAPABILITIES AND THE EMC This leads to a very important point. Some companies, for a variety of reasons, don’t have the internal capacity to handle the management of an international operation. They take a cursory first glance at their existing facilities and management structure, shake their heads, and walk away convinced that they could never be competitive in an overseas market. Very often, though, nothing could be further from the truth. Any company, no matter how small or seemingly inconsequential, should, in a sense, step out of itself and see what its potential is from the outside. By this I mean that the management of many smaller companies are sometimes so caught up with their day-to-day struggle to survive that they don’t see things in the long term from the perspective of someone in a far-off land who just might be very interested in buying their product. Such companies may not have what it takes to operate their own internal international department, but can still be a global competitor by working with an export management company or other entity that can provide, as a proxy, exactly the services performed by in-house staff. Many export management companies, or EMCs, act as the global marketing, promotion, and sales arm of a company that can’t, or doesn’t have the desire to, perform that service itself. In the US alone, about 1,200 EMCs management
companies are currently in operation providing services to more than 10,000 companies; these companies, in turn, account for between five percent and ten percent of all US-sourced exports of manufactured goods.
There are a number of advantages for a small company utilizing an EMC: the investment to enter an international market is significantly minimized; the number of company personnel needed to monitor or oversee the international operation is reduced; and one of the greatest strengths of an EMC is its established network of sales offices, as well as a wealth of international marketing and distribution experience. The one downside is that a company, by necessity, hands over the direct control of its global marketing and sales to another company. This can be successfully offset, though, by working with an export management company as a partner, rather than as a surrogate.
EXPORT AGENTS Another distribution alternative that bears some consideration is working with an export agent. Export agents are, in essence, consultants who provide limited services compared to an EMC, but they tend to specialize in specific industry sectors, countries, or geographic regions. While they understand the requirements of getting goods through the customs process, they usually stop short at providing the kind of marketing expertise that an export management company provides.
In effect, agents focus more on the handling and the sale of the goods, therefore becoming an export manager for documentation and shipping responsibilities. A disadvantage in using an export agent is that they are usually country-specific in their expertise; you will require a number of agents if your company’s sales expand into multiple markets. An important element that can’t be overemphasized is the necessity of treating your international distributor or agent on an equal basis with their domestic counterparts. Too often, a company will create advertising and marketing campaigns, special credit-term programs, warranty offers, and sales incentive programs in their home country without taking the time to adapt the same incentives for use by their distributors in their overseas sales areas. Licensing or joint venture agreements with overseas partners should also be considered. While it’s true that many products that are competitive in your home country can be competitive elsewhere, a joint venture with an overseas partner can provide many advantages unavailable through other means. This is particularly true if a product needs to be technologically enhanced or modified, a costly process that often is beyond the capability of most small manufacturers.
Logistics: The “X” Factor
Anyone who’s spent months piecing together a complicated international business transaction will tell you that few things are more disconcerting than finding out that it has been quashed because a company let its guard down and failed to develop a relationship with its logistics provider.
Similar to the critical role of due diligence in determining who should represent your company overseas, it’s equally important to develop partnerships with the company, or companies, that will have the ultimate responsibility for getting your
shipment where it needs to be, when it needs to be there. The logistics side of distribution was virtually ignored for many years by high-level managers. They usually left the decisions on how products would move in the hands of a traffic manager, who usually learned his business only through on-the-job training. The movement of cargo would happen at a more leisurely pace as weeks went by, and sometimes months would pass before a shipment arrived at its final destination.
But all that changed. Containerization, intermodalism, computerization, and technology have revolutionized the speed of goods moving through an arterial system of sea lanes, air routes, rail lines, and highways—linking virtually every business and population center on the globe. The traffic managers of days gone by now often have a degree and a title to go with it, such as “vice president of logistics.” Their responsibilities impact every domestic and international transaction of their organization.
Logistics—the science of getting product A to point B in a timely, efficient, and cost-effective manner—has come into its own. It’s now seen as a component equal in value to the strategies implemented for product development, marketing, advertising, sales, and customer relations.
There are a number of professional logistics associations around; they can help a company new to international business in finding the right logistics partner to craft a strategy that fits the company’s specific needs. In the US, the Illinois-based Council of Logistics Management offers programs and classes. Other useful resources include the National Customs Brokers and Freight Forwarders Association in New York, the National Industrial Transporting League, and the Supply Chain Council. Similar groups include The Council of Logistics Management in Asia, the European Logistics Federation in Europe, and the Mexican Institute of Transport in Mexico.
International traders with infrequent shipments or shipments that are smaller than those usually handled by larger logistics providers should look into a shippers’ association for help. Shippers’ associations are comprised of small shippers who band together to collectively negotiate volume discount rates with cargo carriers. Those rates are usually only provided to larger shippers who can guarantee large significant volumes on a regular basis.
“Target” Marketing
An old expression goes, “If you aim at nothing, that’s what you’re going to hit—nothing.” In international business, in particular, a targeted approach is infinitely more effective; otherwise, you can find yourself chasing down orders from all over the world in a willy-nilly fashion that wastes time, strains your capabilities, and spreads your resources to the breaking point. The smartest approach is to establish a base for orderly, profitable growth. For a company that’s a new player in the international arena, more often than not it’s best to concentrate efforts in one or perhaps two geographic regions until enough business is generated to support expansion into other areas in springboard fashion.
Unfortunately, many companies see international trade only as an alternative to consider when their domestic business slows or comes close to drying up. Even
worse, an equal number of firms relegate their international operations to the back burner, or even worse yet, they put the brakes on their global business altogether after their domestic economies reverberate. It is absolutely essential that top management of your company see its international commitment in an equal light with your existing domestic business. A failure to do so can only lead to lost overseas market potential, alienated overseas business partners, and disaffected customers who have long memories and whose loyalty will be difficult, if not impossible, to reclaim.
Adaptability
Another common error in doing international business comes from fostering the delusion that a market technique that has proven its value elsewhere, or a product that has brand identity and a reputation either domestically or in another international market, can automatically be inserted into a new overseas environment. Remember: What works in one market more than likely won’t work in another. Every factor, from local advertising and packaging regulations to safety and environmental issues, must be taken into consideration. If the necessary adaptations or modifications aren’t identified by management and carried out on the shop floor, the distributor is put into the position of having to take care of what needs to be done at his end—usually at a greater cost in both time and money than if the issues had been taken care of at home.
The Language of Communications
As we’ve seen in Chapter 2, language is a lot more than just words. It comprises the sum total of how people communicate with one another based on their collective experience. Don’t fall into the trap of thinking that all (or even a majority) of the potential end users of your product in a specific target market speak your language. In all likelihood, most of the people you want to have buy your product don’t speak your language. In fact, they probably don’t think the way you do or act like you do. Nor do they necessarily have the same ethics, morals, or social values that you have.
As a wag once observed, “God must love foreigners; he made so many of them.” If your message isn’t clear to you (or your distributor), it will not be clear to your potential customers—no matter how good your product is or how much you invested to develop it.
Hold on the Paperweights
“Companies of almost any national origin and size make common, basic errors when they try to grow their international business,” says John Anderson, an international business consultant and former vice president-international of the Rubbermaid Inc. Office Products Group. “These mistakes are time-consuming and expensive, and they usually stem from a combination of inexperience, ignorance, and/or arrogance.”
Quoted in the January 10, 2000, edition of Industry Week magazine, Anderson said, “Don’t proclaim your firm to be a “global company”—gleefully handing out globe-shaped paperweights—unless you fully understand the resources, commitment, and actions required to back up that proclamation.”
Attacking faraway markets “wisely and prudently,” the Anderson interview concluded, “can generate growth and profits for years to come. However, halfhearted or ill-conceived globalization efforts produce nothing more than a deep hole into which you’ll pour money, time, and effort with little or no return.”
Remember the Basics
■ Use common sense and clearly appraise your company’s overseas potential. ■ Create an information database around “country books.” ■ Craft an overseas distribution plan that best suits your company. ■ Give logistics equal weight to the other elements of your marketing plan. ■ Think in terms of “targeting” specific overseas markets. ■ Be adjustable and flexible in terms of product development and adaptation. ■ Remember that language involves total communications—verbal and nonverbal.
