Exporting with Strategy

Small Australian businesses will be relatively unknown overseas, so marketing your business, brand, product or service strategically will help grow your export numbers beyond that first chance sale.

So you’ve landed your first export deal, perhaps through an online inquiry or contact through a colleague or by visiting an overseas trade fair. Everything seems to run smoothly and you realise it’s time to look at opportunities to grow your exports. Enter, your export marketing strategy.

International marketing will often be a secondary process to grow your exports, according to Lawrence Potter, co-director of SME advisory firm and export specialists Incite Management Group. “From that first inquiry, if they find it could work quite smoothly, then they’ll take the next step and should start marketing and targeting and looking at other markets.”

The key to successful international marketing is to plan and be strategic. There’s no point mass marketing the same message across a number of overseas markets in the hope that something will come of it. While you might pick up a few good orders, there are some negative scenarios that aren’t worth risking.

Believe it or not, the marketing could be too successful and you could conjure up so much interest that you’re unable to service every customer. And while sometimes it can be essential to carefully select partners and customers, it could also damage your reputation, and opportunities that may have been better for the business to pursue later may be lost. “You need to target the market based on the projected sales you could handle,” advises Potter.

But perhaps the biggest danger in using a mass marketing approach is that each overseas market is very different, and regions and cities within those countries are different again. Each will have its own way of doing business, its own distribution channels, pricing structures, legal frameworks, infrastructure, and so on.

In Norway, for example, Potter says the population is concentrated on the east coast. “So I don’t need somebody who services the whole country, I need somebody who services the market from a base that’s in close proximity, ideally, to a major trading port and can execute the product.”

South America is another tricky region where the market tends to be very heavily concentrated on a city-by-city basis. “So again, we don’t want to secure X company as our total distributor for Brazil when all they do is service Brasilia,” warns Potter. “And if I’m going to the US, my biggest problem is not trying to sell my product but servicing the market on a geographical basis. There are five major geographic regions and no one distribution company covers the whole of the North American market effectively. So if you find a distribution partner over there, ask what type of sales network they have. Traditionally, Americans outsource that function to a sales agency network, so how does that affect your products? Their retail pricing philosophy is also very different. They use what is called an MSRP (manufacturers suggested retail price) as opposed to our RRP, and if you’re trying to get a consistent image, message and brand across the globe, that really affects your price-point.”

Now let’s consider how a marketing message developed in Australia may be misunderstood and could even offend recipients overseas if the correct translations aren’t used, or certain colours or images mean something completely negative in their culture.

The important thing is to understand the target market thoroughly and explore all your options in that market before developing any sort of marketing strategy. Your local industry association and related associations overseas are a good source of information on understanding overseas markets, as are government agencies such as Austrade, international chambers of commerce, and trade promotion agencies.

While your marketing strategy and the methods used will differ between countries and regions, Potter says the important thing is to ensure that your key message remains consistent and your image and branding doesn’t change.

This principle won’t change if you’re selling goods or services, but the marketing channels and strategies deployed will differ greatly depending on what you’re selling. “The difference between marketing a product or a service is in terms of the customer experience and interaction with it,” explains Potter. “With a service, the biggest issue is that all parties are involved at the time the service is actually executed and consumed, so in some respects services can be delivered a bit more securely than products. But the benefit of selling product is being able to look at exactly how you will work with the actual customer base you’re dealing with overseas, and we may actually be able to do things like create a white-label product specifically for a particular market (which you can’t do with services), and that creates unique opportunities.”

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The Plan

Exporters will need to answer the following key questions first, in order to develop an international marketing plan, says Potter:

•         What are the market’s characteristics? For example, where is this product going to best sell? You need to have some geographical understanding as to where the population sits.

•         What is the actual process of entering that market? Are you going to do a joint venture; are you going to be targeting a retail market; are you going to use a distributor or agent, or put your own people in place? The option you choose will affect the type of marketing program you will implement.

•         What are your sales expectations? What do you want to achieve sales-wise; what’s the cost of going into the market; what is the cost to your business to make these markets effective? The most important part is thinking long term. Sometimes getting a short-term hit is great for the bottom line and sales figures, but you’ve then got to ask how it will affect what you want to do in that particular marketplace, because it could lock you out of other opportunities.

Once these key questions are answered, then comes the task of deciding exactly how you will market yourself, which is sometimes challenging when there is a plethora of marketing channels to consider. From traditional direct mail, advertising, public relations and trade fairs, to the newer e-marketing channels, matching the most effective marketing method with the individual target market will be critical.

While Potter believes direct mail doesn’t work internationally—perhaps the cost is prohibitive when email and websites can provide an effective ‘brochure’ at minimal cost and time—word-of-mouth is one age-old strategy that will never die. By prompting people to talk about your business or product due to quirky branding, or perhaps you’ve generated some viral marketing by conjuring debate in an online chat room or blog, it doesn’t take long for the word to spread, especially with today’s electronic communications.

Potter believes attending trade fairs as a visitor or exhibitor is one of the most effective ways to understand the local market and meet potential buyers and distributors. This can be expensive if you go it alone, so it’s worth checking with your industry association or Austrade who may be able represent your product for you at a much lower cost.

There’s no doubting new information communication technologies have benefited export marketing efforts, particularly for small businesses with small
er marketing budgets. As Potter says, it has diluted the boundaries, especially thanks to the internet.

Key Stages

Gary Gregory, senior lecturer in the school of marketing at the University of New South Wales’ Australian Business School, believes a business’ international marketing strategy is tied directly to their ability to reach markets electronically. “The internet has created a paradigm shift in the business world, in which the success of firms, especially SMEs engaged in e-commerce, depends on their ability to understand and exploit the dynamic of the market through e-commerce tools and technologies. I don’t see it as an option, I see it as a requirement,” he says. “Relationships are facilitated and maintained electronically, and while there are still people-to-people transactions and trips made overseas a lot of the relationships, especially in providing training or distribution support, are maintained through the internet and websites.”

Certainly online social media, such as the popular YouTube, are a good way for businesses to generate discussion groups and awareness about their business and products, essentially, for free. “Even our university has developed a YouTube video and I think everyone is jumping on board with that,” says Gregory.

He cites three key stages businesses can go through with their e-commerce strategy, each of which involves different marketing and market capabilities:

  1. * Sales and marketing. This is where most small businesses are at today and involves such things as putting up a website, promoting and advertising products online, providing an online catalogue, gathering market information, enabling salespeople to access product/performance/price information online. Search engine optimisation and search engine marketing come into play here. Essentially, getting your website picked up by search engines (whether for paid or organic listings) will be vital to getting qualified leads to your online shopfront to the world.
  2. * Electronic transaction processing. This stage involves things such as receiving orders online, real-time ordering, online payments, and so forth. Given that transactions will actually occur online, this level of e-commerce requires greater security, greater knowledge, and other legal considerations.
  3. * Supply chain and distribution. This is where most large firms are today and this stage involves ordering supplies online, e-procurement, participating in electronic marketplaces, e-fulfilment—the delivery of product and services online—24-7 service, and so on.

No matter what stage your business might be at in terms e-commerce and e-marketing globally, Gregory says a key finding of his research has been that exporters who use e-commerce as part of their export strategy are more successful than those who don’t. “While that seems like a fairly generic statement, it is true.”

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Sourcing Help

If developing an international marketing strategy seems daunting with so much to research, test and explore in order to make the right choices, you’re not alone. “SMEs need to acknowledge that to be successful in exporting they’re going to need help,” says Potter.

If using a consultant, he suggests talking to a number of different service providers in order to find somebody you have rapport with–do they have the credibility and the trust you need, and can they appreciate the dynamics of your business?

However, Gregory says the internet and the likes of Austrade provide free or at least very affordable resources for SMEs who want to go it alone.

Like anything in business it’s important to monitor the effectiveness of your marketing campaigns regularly, and adapt and change them as the market or your business changes. “Any planning you do should be reviewed on a regular basis,” advises Potter. Gregory agrees: “Things change so rapidly, so at least a couple of times a year or quarterly, would be ideal.”

“For the most part, we look at it on a regular basis to make sure the effort we’re putting in is being properly rewarded,” says Potter. “It does take time to get marketers up and running overseas, like anywhere. You do need to make an investment in time and resources in terms of updating your website and overseas travel and attending trade fairs and so forth, but we want to make sure with all that effort there is light at the end of the tunnel and we are going to get some traction.”

CASE STUDY: Brand Design

Eighteen years ago, physiotherapist Kumar Rajaratnam developed a range of specialist ergonomic chairs, selling them through his own retail business Backcare & Seating. He expanded the business by rolling out the Backcare & Seating franchise, which now boasts 60 stores Australia-wide.

Five years into operation, Rajaratnam realised there were opportunities to expand the business globally, especially into countries where the population had an increased awareness in their health and there were increased regulatory environments, similar to Australia’s OHS regulations. “There are other countries around the world that have had that awareness and drive in regulation that’s really led our targeting,” explains the company’s franchise director Michael Anthony.

“I know [the company’s approach to export] was quite strategic because Kumar’s not an ‘accident’ type of person,” explains Anthony. “He identified the key markets where those drivers were either coming into place, or were already in place. Scandinavia, especially, has had a very strong awareness of ergonomics for many years.”

Rajaratnam then jumped on planes and did his research to find out who the key players in the industry were. “He then went about meeting those people with a view of who is the right partner, rather than who can I sell it to,” adds Anthony.

Rajaratnam secured five distributors in key markets in the UK, Japan, North America and Europe, which meant the product could actually sell into 15 countries.

While the company’s marketing efforts were mostly through face-to-face contact initially, Anthony acknowledges things have changed quite a bit since then. “The world has become a lot more globalised over the last five to 10 years. Nowadays, we can do a lot more using internet technology and provide people with information and tools so they can find us.”

In response to this, Backcare & Seating embarked on a complete overhaul of its brand, both locally and internationally, 18 months ago. “We’ve completely re-engineered the look and feel and presentation of the business,” explains Anthony. “Before we did that, though, we hopped on planes and did our research in Japan, continental Europe, the UK and America, to find out what our competitors worldwide were doing. We were able to create a brief and a strategy based upon that research, and we then brought in an extremely strong team of providers, from branding experts to store architects.

“Together, we built our brand program, which helped lead us in terms of our new product and supply chain, and helped guide us in terms of what products and markets to focus on. Then, we went about implementing it all.

“While we were doing all this work, we started to make our international network aware of what the program is all about and what our aims and objectives are, and then we kept them up to date as we were moving through that 12-month process of implementation.”

While the branding remains consistent worldwide, Anthony recognises that marketing and product roll-out needs to be very market-specific. “W
hat we recognise is that every country is very different and every marketplace is very different. The Hong Kong retail roll-out and the opportunity of building a brand is very different to the UK, which is very different to Singapore, for example. Our distributors or their partners (marketing specialists or whoever they may bring in) know their marketplace best, but we know our brand best, so we look to work with those understandings. “We’re the keepers of our brand and what that stands for. We’ve done the research in the markets before we put the brand together for their marketplace, but it’s their marketplace and they understand the nuances in their market better than we ever could.”

With 70 percent of the company’s total income derived from exports, much of Backcare & Seating’s marketing strategy lies in its international network of long-term partners, says Anthony. “The key is really for people to identify a range of vehicles like expos, websites, networking and so forth but, as they say, ‘we’re only three calls away from the King’. So think about who you know and who holds you in good regard, and then think about who they know.

“Don’t just take one approach, have a strategic approach, create a budget, be very focused, think about the marketplace itself and use your ears and seek to understand because that’s an approach that works well with people in other cultures.”

Marketing Assistance

The Export Market Development Grants (EMDG) scheme is an Australian government financial assistance program for new and existing exporters working to develop export markets.

Under the scheme, Austrade reimburses up to 50 percent of expenses incurred on eligible export promotion activities, above a $15,000 threshold (over two years for fist-time applicants). Each eligible applicant is able to access up to seven grants.

Applications for the 2007–08 grant year open on July 1 this year. For more information, visit the ‘assistance’ section of the Austrade website at www.austrade.gov.au

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