When Times Get Tough, Look to Expand into International Markets
By Renata L. Lerch
Expanding your small business in international markets involves risks that should be meticulously calculated.
It requires additional steps to your planning process, but the results can be very rewarding! Reaching out into international markets can open a world of opportunities for your home business.
When economic times get bad, it’s important to look for ways to diversify your business. International opportunities offer a good option. With the way that the world is getting more and more interconnected, barriers to doing business in other countries decrease every year. What you might have thought impossible a few years ago, might now be a viable way to expand your business. It’s worth at least checking into.
Having an organized operation at home is usually a first step to a successful international expansion. Mastering the production of your product, and the overall business experience, will give you the initial confidence to attract strategic partners overseas.
Begin with a thorough marketing plan, which will serve as a reference to all individuals involved with the business. The document should include all aspects of the product or service life, from complete research to launch, implementation, and execution. This will be key for your business plan.
Starting With a Comprehensive Research Plan
A detailed research plan will help you make informative decisions on the objectives and strategies. It will also help you decide how to enter that market, whether by finding a local partner to distribute your goods, by opening a sales office and importing your products, or by simply translating your web site and adjusting it to the local culture.
The analysis of the macro environment is one of the most important steps of international planning. This involves a clear understanding of the political, social, and economic climate of the target market. Search for trends and forecasts of variables like the exchange rate, inflation, unemployment rate, purchasing power, import barriers and tariffs, and important socio-political events. You need to understand what affects your audience and the industry in general. These issues will hugely impact your sales, and your business model should make provisions for them.
Next, collect information about the audience you want to reach: gender, average age and income, geography, preferences, decision and purchasing process, etc. Based on cultural background, consumers in other markets have a different perception of products, brands, and related services. This will dictate the level of adjustment required to your line of products and how you will promote it to that audience. The importance of understanding diversity cannot be overemphasized. A common mistake that many companies make is to lump many countries together into regions. Each country on every continent has very individualized habits and traditions that you should take into consideration.
Another important element of your research should be the accessibility of local expertise to support your operations. Search for partners that can complement your business model in areas such as sales, distribution, operations, supply chain, legal, and accounting. Also investigate the availability of local talent to help you manage your international operations. Allowing for a fast and dynamic local decision-making process is vital for a successful expansion.
Then you should examine the competitive environment using the “SWOT” analysis technique. Compile key information about your main competitors, and become knowledgeable about their Strengths and Weaknesses. Find out the barriers for entrants, be aware of your limitations as a new player, and know potential cultural pre-concepts that may affect you as a foreign brand. With this information you will be able to visualize your Opportunities and Threats.
Setting Your Targets
The next step is to set your targets. This should include your transaction volume and revenue targets; most multinational companies use the US dollar as the official currency for revenue reports. Due to exchange rate fluctuations, it is recommended to track results in both local currency and the US dollar. Create multiple columns with targets for the year, and also broken down by quarter. On a separate chart, break it down further by distribution channel such as intermediaries, online, etc. Detailed reports will help you understand market seasonality and channels.
Developing Your Marketing Objectives
After conducting thorough research and setting your targets, you are ready to develop your key marketing objectives. Use this opportunity to figure out the macro course of actions that will enable your company to reach its numeric targets. Be realistic; think through objectives that are both aggressive and achievable. Some important objectives at this stage usually involve branding, product adjustment, and distribution channel mix. List a minimum of three but no more than six or seven key marketing objectives for the year. Consider contracting your local associate before or during this stage; the involvement of this professional in the planning process can be very valuable for the success of your international expansion.
Realizing Your Objectives
Next, work on the strategies and activities in support, which are the means to realize your objectives. Start with the “communications message,” the sentiment you want associated with your brand. Use in-country assistance to consolidate a single powerful message that should be reflected in all points of contact with customers such as brochures, advertising, web site, stores, press releases, etc. Sometimes a message that is successfully communicated at home is translatable, but in most cases it will require adjustments to the native culture, which is why the use of local assistance is vital.
Then, develop the key marketing strategies, supported by tactics and programs to execute them. In essence, strategy is how resources are distributed and utilized to achieve your key objectives. Tactics and programs are important to make the strategies action-oriented.
As you work through your six or seven strategies, focus on delivering distinctive value to your customers through your programs. You don’t have to limit the number of programs and tactics under each strategy. Keep them focused on the market audience and product features, with clear implementation facts and time schedules. All should be visually organized, so your team can envision how the tactics and programs relate to each strategy, and how all strategies will contribute to the overall objectives. Bear in mind the resources available for the year.
Finish your plan with a detailed budget chart in both currencies, breaking it down by activities and costs. In the future, a year-over-year comparison will be helpful to evaluate the results and calculate return on investment.
Adjusting Your Plan Regularly
A marketing plan is not a static document. Revisions should be made at least quarterly, as your team becomes more knowledgeable about the new market. In addition to the numeric targets, it is useful to establish parameters to measure the effectiveness of your strategies, tactics, and programs. Determine what to evaluate, and establish standards of performance, but be careful with misleading comparisons between different markets. This exercise will allow you to take corrective action, adjusting your marketing strategies to be more competitive during the year.
Once implementation is in place, have your mind set for future expansions, developing a business model that can be recreated in other countries, with proper adjustments. And finally, make allowances for cultural distinction in management style! HBM
© Lima Lerch Consulting. All Rights Reserved. Renata L. Lerch is a recognized authority on strategic marketing. She is the founder and managing director of Lima Lerch Consulting, and has worked with strategic marketing for over 16 years. Before starting Lima Lerch Consulting, she managed marketing and business development in large multinationals, covering the US, European and Latin American markets. Lima Lerch Consulting (limalerchconsulting.com) provides leading marketing consulting services to companies in the US and Latin America. Contact us at customerservice@limalerchconsulting.com, or logon to limalerchconsulting.com. Renata’s direct e-mail address is renata@limalerchconsulting.com
