Otsikko

Otsikko

14 November 2013

Shotgun tactics when selecting international markets

A business acquaintance told me an interesting story about expansion into international markets. The starting point was four Finnish companies that wanted to start international sales. The companies wanted to cooperate as much as possible to minimise costs. Experts of internationalisation as well as public support organisations suggested that the companies should start by entering a very well-known neighbouring market, Sweden - and set that as a precondition for any funding support. The companies rejected the proposal. Instead, they hired a shared export manager and began an extensive round of testing the markets, the main instrument was trade fairs in over 20 countries. On the basis of this round, one of the companies launched successful international operations in a Western European country, one in East Asia, one in the United States, and one - in Sweden. If the companies had believed advisers, it is very likely that only one of the companies would have been able to successfully launch its export activities.

This post sheds light on why shotgun shooting tactics, as it is often called, is a feasible alternative when a company is planning to enter international markets or an established company launches a new product internationally.

International market selection


There seems to be a broad consensus on prioritisation and selection of international markets among internationalisation experts and researchers:
  • The first step is to select the markets for closer examination by looking at macro-economic variables
  • The second studies overall market potential of the industry in the selected countries, and
  • The third evaluates company´s sales potential in relation to required investments.
The most important factors affecting the selection are thus firm-specific ones and those related to target markets and their entry barriers.

The plans made according to above mentioned model are systematic but also mechanistic. They often lead to significant investments, not being able to change plans as needed, until available money has already been spent.

The main stumbling blocks of commercialisation, which can be identified only with considerable delay, include for example:
  • Do targeted consumer or business segments have adequate underlying needs that need to be satisfied?
  • Are company products acceptable for targeted consumer and enterprise segments?
  • Is there right type of channel partners available, such as distributors, retailers and system integrators?
  • Are there partners, events, communities and other necessary tools available that are needed to execute planned marketing strategy?
Of course, these things can be studied by means of desk studies, but a more in-depth view can only be found by having closer contacts with customers and markets. Traditionally, the tool has been own or outsourced market research, but its disadvantage is significant time, money and resources required. Globalisation of consumption and purchasing decisions, along with online methods, has created new, more cost-effective methods; international market selection can be made more iterative, avoiding too early choices that can easily lead to waste of resources. This means that before concentrating efforts too strictly on certain markets, it is better to shoot a little bit wider, so that really the best launch markets can be found.

Iterative development of international markets


This section primarily deals with digital marketing methods as part of an iterative process to select target markets. We shall focus on the four particular stumbling blocks of commercialisation, discussed above, which are also among the most important market criteria when selecting target markets.

Customer need - market fit


Social media is a huge data repository of consumer and business needs and preferences. Available data are also continuously updated, real-time, so decisions based on this data are likely to be more relevant than when conducting market research based on statistics or sampling methods. Also location information of potential customers is extremely important in country selections of a firm: Facebook, Twitter, Linkedin and other social networks provide information on needs at country level and, where appropriate, at regional or even city level.

Market information can also be obtained by using inbound marketing methods: compelling content that relates to customer jobs to be done, is created on company webpages and consumers or businesses are lured to visit the site. Potential clients are attracted by participating in discussions on key websites and digital communities important to them, by inviting visitors through traditional marketing messages and by optimising company website to get found by search engines. If a company needs to select, what customer jobs its products will be targeting, this can also be conveniently tested by means of inbound marketing.

A website available only in English, along with social media and market statistics, provide sufficient guidance to reduce the number of markets to be screened. The important thing, however, is that preconceptions and 'usual country priorities' should not limit choices too early. When both digital and traditional methods have been used to find a good subset of countries, it's time to go and study customer needs in these countries in more detail. If necessary, and if you have time, the content can be localised for target market languages ​​to go deeper into local websites and social communities. At this stage it is essential to find those potential markets, with customers most eagerly waiting for company products.

Product - customer need fit


In traditional commercialisation models, a product feature set is defined and almost built, before there is any wider feedback on how features fit with customer needs. Various types of limited customer testing are usually arranged, however. Although internationalisation has created customer segments with similar needs around the world, different markets often focus on different features. Iterative product development continuously tests product features and their fit with customer needs, and this testing is started as soon as possible in product development process - and at the same time it is tested, how various product characteristics resonate at different markets.

By discussing pain points that consumers or businesses are facing in their areas of interest, it is easier to understand the needs of potential customers, which in turn helps to prioritise planned features of the product. The audience can also be asked direct questions, queries that are fast and affordable to execute online. Needs for product related support and complementary services can also be evaluated using the same methods.

Seeking feedback from potential customers thus directs development and commercialisation of products to meet also changing circumstances. In addition, the feedback becomes an integral part of market attractiveness assessment and ensures that the selected target markets really appreciate the properties of the company´s product.

Channel strategy - market fit


A successful channel strategy identifies right channel partners as well as makes them strongly committed to sell company's products.

The Internet can be used to discover and explore in detail suitable partners to sell company products. Digital dialogue with potential customers and thus obtained feedback also help define the most popular purchasing channels. These methods are suitable for both online and brick & mortar stores. Similarly, also other important channel players can be found, such as distributors and system integrators. One can also study, for example, what factors are driving the business of potential channel partners or whether potential channel partners are already representing competing products.

Inbound marketing aims to get channel partners interested in a company and its products and tries to motivate partners to visit the company website. The aim is to create relationships, which can be further developed at face to face meetings and various events such as trade shows and conferences.

Understanding of customers and getting them excited to buy company products are precious tools, when trying to get channel partners committed to sell company's products. If this is combined with partner interest generated through inbound marketing, even a smaller firm is able to achieve reasonable cooperation terms and conditions.

Channel partner identification and building their willingness to cooperate should be started early enough on each of the markets relevant for commercialisation. If the process is able to identify channel partner relationships that would have a perfect fit with company business and product objectives, priority of this market should be considerably raised. If, however, a market offers only not so lucrative partner candidates, you should forget this market for the time being and seek the first references on other markets. Similarly, if the sales channel structure or its mode of operation in a market differ considerably from those of other target markets, it usually decreases the attractiveness of the market in question.

Planned marketing strategy - market fit


Here we focus on two things: availability of marketing partners and applicability of company´s marketing communications messages on studied markets.

In addition to channel partners, company marketing plans might reserve a major role for players that boost awareness and demand of company products. The most important ones are advocates, such as industry experts, Internet sites, magazines, etc., that are trusted and relied on by potential customers during various stages of their purchase process. The best and most profound way to affect advocates is by using inbound marketing activities; by offering them new information, views or other ideas related to company products, as well as by attracting them to visit company web pages for more information. Besides influencers, for example, complementary service providers, various communities and events can have a significant impact on demand increase; these can be found by using the same methods as presented earlier.

By testing marketing messages, the best arguments and ways to communicate benefits are found. Also such online content tools as pictures and videos can be tested, to find those that best resonate with potential customers.

To assess the attractiveness of an individual market, it is essential to understand how well partnering and communications, as defined in marketing strategy, can be applied to this market. If the match is great, local adaptation requires very few resources. Of course, if a market is a very interesting one, it is possible to tailor a specific approach applicable to the market by spending a lot of money. In this case, success is uncertain, as experiences from other markets cannot be directly utilised.

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