Grow Global: 15 Ways to Find New or Hidden Markets in the World Marketplace
Content provided by the Women Presidents' Organization
Position your business to thrive globally during difficult times
by Laurel Delaney
In a recent article headlined "Manufacturers' Profits Outpace Broader Economy," The Wall Street Journal indicates that cost-cutting and a surge in exports are bolstering U.S. companies. Despite this, some manufacturers continue to struggle. Foreign competition, says The Wall Street Journal, remains fierce. Companies with custom-made industrial products, such as specialized steel and customized machine tools, must adapt in both domestic and foreign markets. So how do you position your business to not just survive - but thrive - during these difficult times?
According to the authors of the "The 86% Solution: How to Succeed in the Biggest Market Opportunity of the Next 50 Years," the answer lies in the ability to ask the right questions. Here is a poignant example.
Managers at a major U.S. office equipment manufacturer were considering how to market an overhead projector to the developing world when asked a simple question: How would the overhead projector work without electricity? There was silence. It was a question that they had never even considered. Yet this is a question that must be answered every day in the developing world - or for any part of the world that is new on conducting business. By asking and answering this type of question, the manufacturer has created battery-operated digital cameras and printing systems that allow entrepreneurial photographers to operate completely off the grid.
Ask yourself: What is your global strategy? Your answer is a decision that reflects an analysis of market potential, company capabilities, and the degree of marketing involvement and commitment your management team is prepared to make. And since strategy drives how we react and address the business issues we face everyday, let's examine 15 ways to find new or hidden markets in the world marketplace. Hopefully, these ideas will inspire you to respond exactly to the needs of your customers in a whole new way and fuel greater sales growth and profitability for your business.
1. Find and expand into new geographical markets for an existing product. This is the simplest and quickest strategy to grow your business. It requires minimal investment with infrequent and either direct or indirect exporting, and little planning of market development. Exporting is a common growth tactic for both mature international companies as well as smaller companies. This market entry strategy contributes to the revenue stream and profitability of an increasing number of enterprises.
To find new geographical markets, start with your government's information resources. In the U.S., try the Department of Commerce, The U.S. Commercial Service or the U.S. Small Business Administration.
Another excellent way to tap new geographical markets, to minimize your expenditure of time, money, and energy, and to help focus your overseas sales and marketing efforts is to use the Port Import/Export Reporting Service (PIERS). PIERS is the only information service that provides names of U.S. consignees or shippers as well as overseas suppliers, along with detailed descriptions of import or export shipments for the commodity of your choice. This information is taken from ships' manifests by a nationwide corps of reporters and is loaded weekly into a computer database.
I once used PIERS on behalf of an American window blind manufacturer to find customers who were importing window shades into Capetown, South Africa. My client wanted to effectively compete with an industry giant already exporting to Capetown. After securing a list from PIERS that showed who was buying the competitor's goods there, we created a direct mail package specifically for those customers. Using the PIERS list gave us the competitive advantage we needed to show the South African prospects the superiority of my client's product and win them over as customers.
The lesson here is that you don't have to go it alone when going global. Tap into the resources available to you and the world can become your oyster.
2. Tap and penetrate emerging markets. Deferring to "The 86% Solution," we cannot wait for big emerging markets (BEM) like India and China to grow up. The work should begin now to take advantage of opportunities presented by rapidly developing economies and to ensure that we are ready to reap the rewards when these markets explode.
To fully understand the growth potential of emerging economies, read PriceWaterhouseCoopers' "The World in 2050: How big will the major emerging market economies get and how can the OECD compete?" Then review a listing of the big top ten emerging countries to see which ones might be ideal as your first entry point. Next, visit U.S. Commercial Service BuyUSA.gov to find export information by country and to learn as much as you can about a BEM. When you are ready to get started, contact a trade specialist for help. You can find this information on the left side bar panel under "Contact Us" or by searching a little further. Click on it and you will discover important websites relating to the country you wish to do business with, phone, fax, email and Commercial Officer information. For example, click here for a sample for India. Use it to your advantage. Your tax dollars pay for their services.
3. Source new products that complement existing ones and offer them as a new, specially priced package deal. This should be a snap by surfing ThomasNet.com, Alibaba.com and GlobalSources.com, which provide a wealth of information on potential manufacturers.
4. Reduce dependence on existing markets. Protect your company against the risk of decline in domestic sales by exporting, using the Internet, licensing or franchising your industrial products.
5. Develop new applications for existing products that can be offered to new buyers. Here's where a few months of actually living in a foreign country really pays off. It enables you to learn firsthand how the locals do things and what they need to do them better.
Perhaps a favorite food dish in China could be made better and or more quickly if you changed the speed of a kitchen mixer. Or maybe reconfiguring an existing vacuum attachment would be perfect for some out-of-the-way corners in Sri Lanka. Before you set out to do business in a particular country, ask some simple questions. How do the people there like to spend their time? What are their favorite gadgets? How do they clean their homes or cars? How are their clothes laundered? If you can't travel there, the information-gathering strategies outlined above should give you some answers.
Also, don't forget to ask yourself: What other applications is my product or service valid for? Take piano wire as an example; it doesn't have to be used only in pianos and other musical instruments -- click to see uses identified on Wikipedia. It can also be used effectively in the fabrication of springs, fishing lures, special effects in the movie industry, and for cutting soap. Think beyond the everyday uses of things as well as cultural constraints and you'll be amazed at the opportunities that arise.
6. Cross fertilize your marketing efforts through a variety of industries. For piano wire, market coverage should pollinate over into the sporting goods (fishing), movie and soap and detergent industries to reach new and appropriate buyers and to broaden the scope of your business activities.
7. Take the market to your buyers. If you can't beat or woo them, join them where they are located by setting up shop locally in the country you wish to do business. Are you making bicycles spokes and trying to sell them in a country without bikes? Then you better ship a sampling of finished bikes first, educate the consumers, find a small manufacturer and then secure buyers for those spokes!
8. Buy a foreign company that will produce products on U.S. soil. Toyota Motor Corp. is a good example with their bustling plant in Troy, Missouri producing aluminum castings for cylinder heads and engine manifolds. They are not merely surviving but thriving. With their unique manufacturing capabilities, they have created sufficient pricing muscle where they no longer are pressured to squabble for price cuts. Buyers need their product, period. And apparently, nobody else in the world can produce it with the quality that Toyota guarantees. As a result, both rising domestic demand and higher prices for imports has helped Toyota sustain an admired competitive position in the world marketplace.
9. Offer new services that complement your industrial products in order to boost profits. This segment of marketing involves all countries at every level of development; even the least-developed countries are seeking computer technology (China and India, for example) and sophisticated data banks to aid them in advancing their economics.
10. Move more production of subassemblies and parts to cheaper offshore factories. That's what Hoveround Corp., maker of motorized wheelchairs and scooters in Sarasota, Florida did. The problem they ran up against was set prices by fee structures for Medicaid and by contracts with large insurers. By moving production outside of the USA, the company has consistently widened profit margins slightly each year.
11. Acquire companies in different parts of the world to lay the foundation for future growth and leadership in a variety of industries. If you can afford to make the financial investment, this is a strategy for the bold, growth-minded international strategist. Wal-Mart illustrates how difficult it can be to take a domestic concept and go global. After eight years and $1 billion in losses, Wal-Mart is selling its 85 German stores to Metro AG, the country's biggest retailer for an undisclosed amount. Lesson learned: Take it one country at a time and be prepared to change the formula that brought you domestic success for each foreign market you enter.
12. Establish a strategic global alliance (SBA). An SGA is a business relationship established by two or more companies to cooperate out of mutual need and to share risk in achieving a common objective. This strategy works well for market-entry or to shore up existing weaknesses and increase competitive strengths.
When I first started exporting foodstuff, I contacted one of the largest Japanese trading companies in the world: Mitsui & Co., Ltd. They had a local office in Chicago and did a significant amount of exporting to Japan. I approached them about piggybacking my products with theirs. Since we had the suppliers and they had the established distribution channels and customers base, it was a good match. By combining my company's gourmet food items with their beef products, we were able to provide extra value to customers throughout Japan. For many years we went on to export container loads of product every month. That experience taught me the importance of SGA's in growing a business internationally - especially for SME's.
13. Globalize your business by forming worldwide product groups by function. Your design can be done in California; your manufacturing can take place in China and your distribution might start in Antwerp. Together, you have a powerful global network.
14. Form joint-ventures in places where you desire to do business. For example, many years ago, JCPenny had developed three alternatives for implementation in global markets: (1) owning and operating JCPenny department stores, (2) licensing for forming joint ventures with local partners, and (3) exporting private-brand merchandise to be sold through other retailers. Since then, the Internet has fostered another alternative for growth.
15. Market your business aggressively and in the language your buyers understand. For example, if you make one style of an electrical component, what happens if the market changes and your buyers no longer need your particular type of component or they learn how to source it cheaper elsewhere and on their own? In a case like that, it is best to supply many grades, more styles and more types of electrical components to ensure at least one product will always be in demand.
Global competition requires quality products designed to meet ever-changing customer needs and rapidly advancing technology. Develop your global strategy. Refine your international business practices. And discover every imaginable hidden market for your products and services. You will transform your business and take the lead in the world of expanding customer choices.
Copyright ©2006 Laurel J. Delaney. All rights reserved.
Laurel Delaney runs GlobeTrade.com and LaurelDelaney.com, both Chicago-based firms that specialize in international entrepreneurship. She is also the creator of "Borderbuster," an e-newsletter and The Global Small Business Blog, which are both highly regarded for coverage on global small business. Laurel can be reached at firstname.lastname@example.org.
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