10 Steps to Successful Global Expansion
To start global expansion overseas, it’s first important to start at home. You must be willing to dedicate manpower and money for these fundamentals … and to adapt to what works abroad. Read on to learn the 10 key steps we’ve identified as essential to your business success.
- Evaluate Your Names and Slogans in Other Languages
Before you spend huge amounts in global expansion ventures, first determine the basics. Do your company name, product names and taglines have any negative meanings in other languages? Take a look at some of these humorous translations.
For example, Coors’ slogan “Turn it loose” was interpreted in Spanish as “Suffer from Diarrhea.” Colgate introduced Cue toothpaste in France, unaware that Cue is a French adult magazine. Ghana’s popular soda Pee Cola wouldn’t sell well in the U.S. or U.K., and neither would Pet Sweat, a Japanese bottled water sold to humans. Even multinationals make mistakes.
Evaluating names and slogans before market launch is very cheap insurance. A professional language agency will often inexpensively research approximately seven names and slogans in the top 10 world languages. Catch these gaffes before they catch you.
- Adapt to Target Countries’ Marketing Methods
Purchases overseas may be done in cash as is done in much of Africa or by swiping a cell phone as occurs in Korea. Are you willing and equipped to accept less common payment methods?
Do you market at home via e-commerce, social media, direct mail or telephone? Will those methods work in your target countries or must you change them? In much of Latin America, Asia and the Middle East, for example, getting a personal referral or introduction is the main way prospects will talk to you.
Will your benefits and appeals work in your target countries? U.S. advertising that promises low prices may have to be rewritten to focus on the family, education or the environment, motivators of many buyers abroad. A professional global-expansion firm can guide you on connections and marketing methods,
Have you planned to localize your website? Over 72% of global consumers prefer to use their native language when shopping online, even if they speak English well. Additionally, more than 56% say that obtaining information in their own language is more important than price. Are you working with a professional language localization firm that understands both culture and translation?
- Willing to Acculturate?
You must be willing to adjust your product and marketing messages to local cultures. This can involve selling methods, content, packaging, pricing, names, benefits and appeals, and most other factors. Correct acculturation can help you succeed in your target country and provide other expansion opportunities. If you aren’t adaptable, global expansion isn’t for you.
For example, McDonald’s sells lamb burgers in New Zealand and mainly has vegetarian offerings in India. There they also had to establish two kitchens so that cooks don’t mix vegetarian and non-vegetarian dishes or utensils together.
In the U.S., shampoo is typically sold in pricey, medium-size plastic bottles. However, if you sell shampoo in small packets for one or two hair washes at a time, your market greatly expands to the cash economies of developing countries.
- Build Your Home-Market Demographics
Build a profile of your expected or current customers. Ask the following questions:
- Who buys your product or service – children, men, women, both?
- What are their age ranges or education level – urban or rural, consumers or other businesses?
- If businesses, what titles or levels purchase from you?
- Is your target audience growing or shrinking over what time period?
- What income levels can afford your product? (For example, candy requires minimal income while golf clubs require an upper middle or upper income).
Be as specific as possible. Then determine whether your product or service will appeal to the same profile abroad or whether other audiences are possible. You might have too much competition at home to target other niches, but those niches might be available overseas.
Also, don’t assume that reliable infrastructure (i.e., efficient ports, roads, Internet, electricity, health services, refrigeration) is readily available abroad. If your target countries don’t have these, what is your Plan B?
- Received Inquiries from Abroad
While unsolicited, incoming inquiries may be flukes, they can indicate sources of market interest. Look on the Internet for in-depth reports about these countries and their lifestyles, spending habits, business practices, etc.
At trade shows, foreign distributors or agents may ask to represent you abroad. Consider this option as part of a whole global expansion strategy. Plus, be sure to ask a global marketing consultancy how to vet these people before you decide to hire them. Their extensive contacts and reputation may not be as sterling as they present to you.
- Determine Complementary Products or Services
For example, if you’re selling a sports drink, similar primary products are sportswear and sports equipment. Search online for market studies of those products’ international sales and their biggest country markets. These indicate the volume and revenue to be gained.
You can also search the Internet for market studies of your product’s or service’s expansion. These studies are often done by independent research firms or sometimes by Master’s or PhD students.
- Examine Foreign Trade Publications
Does your product/service have trade publications in the U.S.? See what their international circulation is, and then research what trade publications exist in other languages and countries. For advertisers, each publication publishes its circulation figures. Those are an indicator of market size and country interest. Do be sure to distinguish between paid and unpaid subscribers. The paid numbers are a stronger indicator.
- Read Secondary Market Studies, then Cross-Reference
Many large databases such as Business Monitor International, Thomson and the Euro Monitor Passport analyze the present and future growth of many industries around the world.
See what market studies are on the Internet. These may be domestic or foreign. If foreign, see whether there’s a synopsis in English. If not, a professional language agency can translate these for you. Don’t skimp on this expense. It’s a miniscule part of your overseas research and expansion budget.
Through the many sources above, you should have obtained countries that may be good markets as well as stats about population size, income, growth, etc. Now let’s cross-reference.
Let’s say you’re selling sheet music for pianos. Your main target market is children from ages 6 to 16. Which countries have huge populations in this age range? Some are in Europe. Others include Russia, Turkey, Mexico, Brazil, Colombia, China, South Africa and Egypt.
However, sheet music requires either a piano at home or access to one outside (such as at school or a music academy). In addition, most piano students’ families are middle to upper income. In developing countries, these are the elites.
For example, Egypt has forecast rapid population growth among 6 to 16 year olds but most Egyptians are poor. Therefore, the market for this product is very limited and concentrated in the wealthy sections of a country’s big cities (Cairo and Alexandria). Is it worth your expense of targeting this limited group?
By contrast, China overall has a low per-capita income because the population is over 1 billion people, but huge segments are middle class and wealthy. Chinese parents spend heavily on children’s education, and music is a big part of that.
This method can give you a list of around ten potential overseas markets.
- Evaluate Your Current and Potential Sales Methods
How do you sell domestically? Do those methods apply overseas? For example, cold calling is not done in most countries. Also, in the U.S., retailers usually open every day and many operate until 9 p.m. on weekdays and until 6 p.m. or 7 p.m. on weekends. Some countries restrict Sunday selling (stores must close by 1 p.m. or 3 p.m.) or prevent sales on certain religious days (such as Fridays in Muslim countries). How will those affect your expansion decision?
If you’re seeking reps abroad, be sure to contact your nearest District Export Council. These are offices of the U.S. Commerce Department that provide trusted and vetted manufacturers, distributors and agents in other countries.
Countries’ commercial attachés at embassies in Washington and at their consulates in many cities can also help link U.S. companies with overseas partnering opportunities.
- Examine Countries’ Laws and Customs
Adaptability is critical. Ask yourself the following kinds of questions:
- Does your service require a license of some kind? What are the licensing laws in your target countries?
- Are you accustomed to interacting with senior CEOs? That’s more common abroad than here.
- Are you offended by nepotism? In Latin America, for example, companies employ family members because they’re more trusted than outsiders.
- How strong is your stomach? Can you tolerate spicy foods and many courses? Dining is a major way to build trust with overseas partners. If you’re not accustomed to their process, you’ll not succeed in building critical relationships.
- What is your budget for market entry? China may seem appealing but generating a profit first takes many years of constant investment and customer cultivation.
- Do you speak the native language? If not, are you prepared to work with an interpreter?
- Do your desired countries permit your bringing profits home? Or do they have currency export controls?
- How involved is the government in your overseas venture?
- In most other countries, it’s hard and expensive to fire employees. Are you prepared for that or will you use reps or agents instead?
Getting the Right Guidance
The first steps will help you create a list of potential overseas markets. The final steps will help you narrow your list. They also illustrate the flexibility you’ll need when doing international business. Many more steps and examples can be added.
With this guidance, you can begin the process of gaining lucrative revenue streams outside your home market (U.S exports were 196.8 billion in September of 2017 alone). This pie is too big for you not to get your piece.
We at Auerbach International are a full-service language agency (translating, interpreting, name screening, etc.) and global-marketing consultancy (countries to target and strategies to enter them). Contact us today to learn how we can team with you to create your successful global expansion.