Increase Sales by Expanding Into New Markets

Increase Sales by Expanding Into New Markets


Congratulations!  You have taken care of satisfied customers from one side of the United States to the other.  Your business has grown from a startup level of sales to a national business.  You are a known entity capable of servicing a nation of more than 320 million people.  Delivering high quality results to a national client base is an incredible accomplishment.  What is even more incredible is that there are still more than seven billion people who still don’t know what you can do for them–remember, the United States comprises less than five percent of the global population.

Even though we did not take obvious differences in global purchasing power into account in the preceding paragraph, the point is that there is still potential to multiply revenue by reaching out to new markets.  This is not an easy endeavor, but the organizations who accomplish this feat find that the hard work is worthwhile.

Think about the concept of market expansion the following scenario.  When you enjoy the furniture and appliances in your homes, see the variety of cars on the way to work, use the latest technological goods to share information at work, and also wear your clothing and footwear on a daily basis, you have already helped somebody else succeed in expanding into a new market. If you can purchase finished goods made in another country, then why don’t more Americans try to compete in the global market?

For one reason, many of us tend to think exclusively in terms of the United States.  We are an ethnocentric culture, and that is a major factor.  There are many people who would like to compete in the international marketplace, but they simply don’t feel comfortable with the process.  Marketing to overseas markets can definitely pose serious challenges, but it is still possible to overcome the challenges.

If it was easy, everyone would do it.  The author of this article had a boss who liked to say that to him, while dropping an urgent assignment on his desk that had never been discussed until that very instant.  While that young professional may (or may not) have wanted to hear such a statement at the time, the statement was true then, and it still applies to this day.  Many businesses maintain exclusive operations in the United States for many reasons.

We will focus one of the basic reasons for this exclusivity: there is a lack of confidence in the available marketing and legal expertise required to manage the requirements of international commerce. Simply put, it is just not an easy thing to do.  To that end, I would like to interpret some lessons learned from Philip Kotler and William L. Wilkie.  These men have truly “written the book” when it comes to the study of marketing management and consumer behavior, and they could foresee the impact of international trade several years ago.

Key Ideas

To get you comfortable with the process of expanding into a completely different market, we will examine several key ideas:

  • Making the decision to move forward
  • Choosing the right target market
  • Overcoming barriers to international trade
  • Considering key cultural differences between your local and target market
  • Organizing your business
  • Managing the supply chain

How many of these factors have you already taken into consideration?

First, you have to decide if the move to go international is right for your business.  If you could overcome your fear, would the move make good business sense?  Are you able to mitigate the risks related to dealing outside your home market? There are plenty of organizations that would say no if they took a serious look at their situation.

If you can honestly see the opportunity, then you need to understand a basic question. To whom does your business intend to sell your product? This question serves to figure out if your company has developed a target market for the product.  If so, will they be able to predict any adjustments to the existing local market in order to succeed overseas? These are critical questions to answer. Everyone involved needs to know the various factors that go into having a successful entrance into the global market.

Once your company understands who the target customer is, then management must determine the best markets to enter for success. This is where you should employ sound research techniques. Some of the answers should be relatively easy to find, but other answers will require more effort.  The goal of the research is to find answers to the current and future market potential.  The experts need to refine the market potential data to possess a firm grasp of a realistic sales potential for the offering. Solid forecasting skills are very useful to assess costs and profits of the campaign.

Going Global

Once your business has run the numbers, management must develop skills in place at the appropriate levels. You must clearly understand the complex cultural factors that directly impact business policy. Government policies could provide barriers to trade, especially in a protectionist environment. A business should understand all tariffs, duties, and other barriers including taxation. Many markets require a strong expertise in negotiating with key national figures in order to remain competitive.

You have validated the decision to go global, you understand your selected market, you have targeted the customer and you have maneuvered through the bureaucracy. This is the time when an organization needs to consider key differences between the local market and the new target market.

By this time, a business would have considered the consumer incomes to ensure there is a sufficient willingness to pay for the products, and examined the economic infrastructure supporting the target market to ensure the product will be useful to consumers in the new environment. Think of a phone that will not work in another market due to connectivity issues.

Many lifestyle related factors impact the likelihood of success for your company. Cultural values are important to understand for a company to relate to the market. There is a history of companies that had good products, but missed the mark when reaching out to their desired customer base. Take great care to understand the key cultural details that get your intended message across, so the intended message will not get lost.  Existing product preferences have existed long before you entered the new market, and hopefully your new product will overcome those preferences. The new product introduction will require extensive communication of the benefits to your new market.

It is important to take language differences into consideration in addition to examining cross-cultural differences. Literal translations of languages could lead to embarrassing marketing campaigns. Does the author really have to hash out specifics when discussing the cross-cultural problem that Ford had with trying to introduce the “Pinto” in Brazil?  There are several cross-cultural dimensions to consider that were not covered here.  This article serves as a starting point until you study global consumer behavior on a deeper level.

Now that you have found a steady stream of loyal customers, you need to make some key business decisions. Many businesses began by indirect exporting their products through intermediaries. As revenue continues to grow, you might gain a larger profit share by controlling more of the operation.  Your company will have options, but it will depend on how much profit and risk you want to share.

Once you have developed a revenue stream of significance, will you be ready to hire an internal organization to manage the operation? It proves helpful to hire experts to manage these issues and keep the company abreast. Many large companies have developed a team of export specialists, corporate marketing managers and accountants. These professionals will work with a specified country manager whose team manages the business operations from that specified target country.

It is of vital importance to take your supply chain issues into account.  It would be a terrible shame to get this far along the path and fail at the point of delivery.  The operations team must communicate with the sales and marketing team to decide on the preferred mode of transport. Perhaps your product is of such specialized high value, that it must fly regardless of cost. If not, is your supply-chain organized to a point that it can sustain a month-long ocean freight transit time without risking lost revenue to a hard earned customer base?  There are third-party logistics companies (3PL’s) that specialize in addressing these types of concerns.

The rewards can be plentiful for those businesses who are willing to allocate the additional hours of research and planning, and absorb the required costs.  Again, the author asks you to simply take a look around your home and around your neighborhood.  It was probably difficult for companies like Adidas, Ikea, Sony, Toyota, and Versace to establish themselves overseas during their early days. They did the work anyway, and each of them found a successful pathway into markets across the world. There are challenging internal questions to be considered, and many questions weren’t even mentioned in this article.  In the famous words of the immensely successful artist and entrepreneur Patti LaBelle, “No one said it was easy.”

Hopefully this article gives you something to aim for while taking a realistic look at getting into a new market and staying there for the long term. Yes, there are a multitude of commercial and cultural obstacles to successful expansion, but they have been managed by many others before you.

Be brave and do what it takes to accomplish your goals!

Preston Charles, a graduate of Morehouse College and Penn State University, has more than 20 years of experience with leading logistics and supply chain organizations. He is the founder of Worldwide Advancement Consulting, a company that provides strategic, operational and project-based support to clients.