In a time of globalization, an international footprint is increasingly important. Expanding internationally can allow retailers and brands to extend their customer bases, prolong the life of existing products, diversify risk and combat seasonality. But successful international expansion is complex. Distinct consumer preferences, competitive and cultural differences, and increased management and operational challenges require companies to make tough choices as they define their international strategies. But with aOrlian’s deeply rooted international culture and experience helping companies across multiple consumer sectors expand globally, we have the right resources to help you get there.
Fundamentally, establishing an international growth strategy requires the answers to two questions: Which markets do you target and how do you enter each market?
Which Markets Do You Target?
We employ a prioritization process that typically begins with major markets based on GDP and other macroeconomic factors, and then winnows down these markets to a smaller set of candidates organized by market type, regional and other clustering factors. The key to this exercise is using an organization’s strategic corporate guidelines to identify a short list of the most attractive markets. Typical organizational priorities include:
- Near-term financial contribution: What is the expected timeframe for a new geography to contribute to the bottom line?
- Long-term growth potential: What is the growth trajectory of your brands in this target country during the next five to 20 years? Can your business afford to dedicate resources to a market that may not reap significant benefits for another few years?
- Risk profile: There are a number of factors that can stall market expansion success, including government and regulatory changes and economic uncertainty.
It’s rare that one prospective market or market cluster will receive a high score across all criteria, so executives must evaluate a series of trade-offs among the final list of countries being considered. For example:
- Market size vs. market growth
- Market growth vs. market risk
- Global brand consistency vs. tailoring to local appeal
- Speed-to-market and cost efficiency vs. control
How Do You Enter?
Once the markets are selected, proper market entry planning requires a solid foundation of knowledge about the myriad of factors that can affect consumers’ perceptions about a new brand and access to products or stores. This requires in-country research to address key questions such as:
- Business model: Should a direct or distributor/partner model be employed to maximize market potential and profitability?
- Consumer demand generation: What are the best value proposition, product range and marketing strategies to reach your key target demographics?
- Competitive positioning: What are the breadth and depth of current market alternatives?
- Channel strategy: What is the most effective way to deliver goods and services, and how developed is the country’s infrastructure?
- Regulatory compliance: What are the potential governmental changes that can impact your strategy, including regional versus national compliance regulations, product regulations for health and safety, and employment regulations?
- Supply chain and organization infrastructure: How readily available are product resources, how established is the manufacturing base, and how expensive are employee labor and associated materials?