AMI International Expansion White Paper #2
Do you have a solid strategic business plan to develop your company’s international sales? Does your management team possess a clear understanding of the plan and their role in it? Do all relevant constituents “buy into” and support the plan?
Read below to see exactly how AMI helped one confectionery client to develop and implement an international strategic business plan to increase their export sales.
Developed & Implemented International Strategic Business Plan
The latest issue of Smart Money squarely supports the benefits and opportunities of investing in international markets… ”Economists and market strategists say the case for going global doesn’t rest solely on near-term bargains in stocks, bonds or other investments. It also rests on the conviction that over the long term, economic growth will be stronger in many countries outside the U.S…developing economies like China, India and Brazil are growing two or three times faster”
Read on to see how AMI identified and executed on a well-defined expansion business plan that grew a named, premium confection client’s sales by 300%.
The Challenge
An emerging, premium U.S. confectionery marketer hired AMI to develop their international business platform. The international markets seemed promising but the company did not have the internal resources to assess sales opportunities. As a result:
- Export sales were conducted in a haphazard manner by staff with little relevant training
- The client previously sold to nearly any international customer that approached them, little assessment was conducted
- Pricing to all international customers was the same, whether it was a large importer, small wholesaler, or retailer
- Very little marketing support was provided to the international customers, resulting in poor launch executions, weak pull-through and disappointing sales
The Strategy
After a comprehensive global market assessment, AMI identified Japan as a high potential foreign market. Using our network of importers and extensive international database, AMI identified a large Japanese importer which specialized in upscale, premium imported products. Japanese packaging and marketing were developed, ingredients checked and approved for import, and target accounts were identified. AMI arranged for the client to exhibit at a major international trade show in Japan. The results were spectacular:
- Sales increased 300% after the first year
- Several leading Japanese retailers launched the product in their stores
- Good distribution and an effective print media campaign increased brand exposure
- The brand is growing, and the importer continues to sell the product, years later.
5 Steps to Developing and Implementing an International Strategic Business Plan
Step 1 – Conduct a comprehensive global market assessment
The objectives in the market assessment are to:
- understand the competitive landscape
- product demand
- market size and growth rates
- ‘consumer demographics
- barriers to entry
A U.S. exporter needs to identify and comprehend their strengths and weaknesses relative to international competitors. Once this analysis has been conducted and an understanding is gained, then you can focus on defining key market opportunities.
Step 2 – Choose 2-3 high priority international markets
High priority international markets are the countries with the biggest volume potential for your products. In addition, these markets will have few relative barriers to entry. They are high priority because they offer “low hanging fruit” – large, quick sales opportunities without expending a huge amount of resources or time. They will possess good infrastructure for distribution, and retail or foodservice sales channels which can afford your company’s products.
Step 3 – Develop a profile of the ideal customer / importer in the high priority markets
A company needs to understand the exact type of international customer they are seeking. All criteria should be clearly developed to agree on the target customer for each export market. Here are some important questions to ask yourself when developing your company’s importer criteria:
- In what sales channels are they strongest?
- What other product categories and brands do they import?
- Who are their main customers?
- How many sales representatives do they have?
- How would they position your brand relative to their total portfolio?
- What marketing activities would they conduct for your products?
- What budget are they willing to commit to spending?
All of these questions – and many more – need to be asked and understood prior to choosing a master importer/distributor in a target market.
Once a well-defined profile has been established, prospective importers need to be identified and recruited. This process requires excellent research prowess, tenacity, persistence and patience.
Step 4 – Pricing needs to be established
Pricing is a critical component of the marketing mix with exports as well as your domestic business. If pricing is not developed in a systematic, strategic way, then your importer will have difficulty selling, “parallel imports” will affect sales, and end-user customers such as retailers will buy from the lowest priced supplier (which may not be your appointed distributor).
Export pricing should be the same or slightly lower than the best discounted price available in the U.S. You need to avoid situations where international customers can buy from a U.S. distributor at pricing lower than a manufacturer’s export pricing. This will result in the same chaos as described above regarding “parallel imports.”
Many successful exporters consider their export sales as “marginal” business. That is, pricing is determined based on a “marginal contribution,” and excluding any fixed costs. A company’s fixed costs are included in the company’s U.S. domestic pricing, but can be removed from export pricing since most costs related to international business are variable.
Step 5 – Develop a solid product launch plan
As you do in the U.S., when launching a new product overseas it is imperative to develop a sound launch plan and implement it flawlessly. Adequate resources should be deployed, such as sufficient samples for tasting. Advertising and promotion should be considered, particularly for retail products which are innovative and perhaps new to market.
Trade shows are an excellent means of gaining exposure in the market. They are outstanding opportunities to introduce and maintain your products international presence as well as cultivating long-standing relationships.
Did you know that you can receive 50% reimbursement for most international marketing activities such as trade shows, foreign language packaging, print media, sampling and in-store promotions? Ask AMI how you can receive these benefits while growing top-line sales revenue!
Sincerely yours,
Peter Guyer
President
Email: [email protected]
Phone number: (206) 462-4886
1 Smart Money. “Five Ways to Invest Globally” July 9th, 2010.
http://www.smartmoney.com/investing/stocks/5-ways-to-invest-globally/#ixzz0utj6qXHw