Entering a foreign market can be one of the most exciting stages in the development of your business. Selling your product to a foreign market will mean many fresh challenges as well the opportunity to significantly grow your business. Operating in a foreign country can also diversify your business so that you are no longer exposed to the risk of a single market.
Researching Potential Markets
Before you commit to a foreign market it is important that you research it carefully. It is critical that you look at how the legal system, culture and religious beliefs may impact your business. Many products that are successful in their domestic market struggle in foreign markets due to differences in taste and culture. For example, when KFC entered the Chinese market it had to radically change its menu to meet the local culinary tastes. The Chinese KFC menu includes items that few Americans would recognize including egg tarts, shrimp burgers and soy milk drinks. It has even changed its menu to meet certain regional tastes in the country. By adapting to local tastes KFC has grown the number of its restaurants in China to more than 3,000.
Creating A Plan
The next step should be to create an export plan. This plan will help you to identify the potential risks, barriers to entry as well as opportunities that exist in that market. This plan should include a list of your major competitors and potential partners in this market. You should also establish how you intend to market and distribute your products.
Selling Your Products
Identify how you are going to sell your product in the market that you are entering. One of the most common approaches is to use local sales representatives or distributors. Sales representative typically work on commission and use the sales literature and marketing materials that you provide. Foreign distributor purchase the goods directly from you at a significant discount and then resell them for a profit. Alternatively, you may want to sell directly to end users either through establishing your own retail locations or online.
Franchising And Joint Ventures
Franchising and joint ventures are common approaches to entering a foreign market. When you franchise, you provide local businesses with limited intellectual property rights to your products. You also provide processes that must be followed by your franchisees. Joint ventures involve teaming up with a local business. The two businesses share joint management and control of the new business. This enables to you to share costs as well as benefit from the local business knowledge of their market.
Pricing can vary significantly depending on the market you are operating in. One of the most straightforward pricing models is the cost-plus approach. This involves basing your pricing on the cost of goods plus the costs associated with importing the product into the foreign market. While this approach is relatively simple, it has the disadvantage of potentially setting prices which are uncompetitive in the local market. In markets where your product is unique and there is high demand you may be able to price higher than in your domestic market. Another option is to attempt to undercut the local pricing in order to gain market share as quickly as possible.
Foreign Language Website
When you enter a foreign market, you will need to develop a new website for that country. This is particularly important if the market that you are entering speaks a different language to your domestic market. Having a new website will allow you to target the marketing messaging, store locations, contact information and product details to that market. Having a foreign language website created is not complicated, compared to some of the other challenges of entering a new market. One good option is to use a global translation service, (for example, Simple Translation), which specializes in translating websites from one language to another.
Entering a foreign market will often involve a sharp learning curve. You may be required to adapt your current processes and systems for the new market. But the benefits of selling into a foreign market invariably justify these challenges. Businesses that enter foreign markets typically become better diversified and more robust organizations with greater potential for rapid growth.