Top 5 Errors to Avoid When Expanding Your Business Into Global Markets
Starting a business is not for the faint-hearted, as any entrepreneur will tell you. Faced by numerous pitfalls (some of them invisible), you rely on expert advice to guide you through.
If you’ve decided to expand your business globally, just like in those early days, you’ll need to seek the benefit of expert knowledge to help guide you through those first tricky steps.
Bridgehead International Agency‘s handy list of top 5 mistakes businesses make when expanding into overseas markets will help you avoid making those same mistakes.
- Appointing lawyers or accountants too early
Question: Why would you appoint a lawyer or an accountant before gauging the actual demand for your product or service offering in your new target market?
Many government support agencies are keen to introduce you to them; however, we firmly believe that the most effective first step is to evaluate the market. Speak to your potential customers and start to build a sales pipeline. This provides the backup and evidence required to incorporate and invest within your target market and allows for a swift ROI.
- Not having a Go-To-Market (GTM) strategy
To maximize the potential of your product or service offering, we strongly recommend that you create a Go-To-Market (GTM) strategy for each market you want to penetrate. Having a GTM strategy will be pivotal to your success.
Begin by undertaking thorough market research, encompassing both primary and secondary research. Ultimately, market research will help you to determine the level of demand for your product or service offering, and how and where your potential customers would expect to access it.
Once your research is complete, you can use it to fuel your GTM strategy. A solid GTM plan will incorporate who your target audience is, product-market fit, competitive landscape, pricing, distribution channels, marketing and sales strategy, budget, and resources.
- Not Assessing the local competition
In each new market, you will likely encounter new competitors. It is vital to understand what the competitions are doing. Understand what their unique selling propositions (USPs) are, so you can counteract any competitive advantages. Who are they targeting? Which channels do they use? If your own product/service has a competitive advantage, make sure that you communicate this to your target audience.
Even massive companies with global swagger can sometimes pay the price for failing to respect their local competition.
A classic example is Starbucks’ disastrous entry into the Australian market. Opening their first store in 2000, and expanding to 84 outlets across the country, they were eventually forced to close 75% of their stores after 8 years, incurring a loss of over 140 million dollars. Failure to analyze their competition was a critical factor; with competitors, such as McDonald’s McCafe and Gloria Jeans offering a more competitive price, and a beverage range better suited to local market tastes.
One good option can be to work with established local partners within the supply chain. They have the necessary local knowledge and expertise. By building local relationships, your transition could be a lot smoother.
- Not adapting your product or service offering
Companies often assume that they can launch identical products in different markets. This ignores the fact that they’re dealing with different customers. Be mindful to tailor your product or service, to appeal to the local market. This could be product modification, images, packaging, or marketing.
If the product doesn’t resonate with the local market, it will need adapting and localizing, to drive sales.
Let’s look at McDonalds. This fast-food behemoth’s global success can largely be attributed to standardization and adaptation. The chain always adapts to the needs of the local consumers. In Germany, a country renowned for its love of meat, their burgers combine Nürnberger sausages with beef. Their outlets in Germany also serve beer, a traditional accompaniment for food. In India, McDonald’s adapted their menu by replacing beef with chicken. Their “Maharaja Mac” is the local version of the classic Big Mac. The list of their local adaptations is both extensive and impressive.
- Failing to adapt your sales and marketing channels
Many companies believe they can enter new markets by replicating the strategies that have served them in their domestic market.
This lazy assumption is a common trap that many businesses fall into.
Choosing the best distribution channels for your product is vital, and these can only be identified with extensive research. One of our clients is a Singapore-based business called Oaxis, which manufactures cameras aimed at children. For 4 years they attempted and failed, to penetrate the UK market. During this time, they worked with 5 different distributors. After appointing Bridgehead, we developed a GTM strategy for them, encompassing competitive benchmarking, and targeting specific partners across retail, e-commerce, and distribution. We identified key target customers and 5 different channel partners. Major retailers such as Selfridges, Shop Direct, and Dixons became resellers of their product range. Within a year, they hit $1m in revenue.
Your market research should identify which marketing channels deliver the best results in each market. For example, in China, with Facebook, Twitter, and YouTube being banned, their biggest social media platform is WeChat, largely unheard of in the west. It is used daily by over a billion active users, for restaurant bookings, flight bookings, shopping, transferring money, paying bills as well as creating posts. Unsurprisingly, this is the most popular tool for social media marketing in China.
Conclusion – seek (expert) advice
If you take just one thing away from this article, it’s that you should always seek expert advice when going into overseas markets. You don’t want to waste your time and money working with the wrong distributor that doesn’t bring in sales, or the wrong consultants that have big visions that are far from reality and do not realize.
More about Bridgehead International Agency
Bridgehead International Agency has achieved a pipeline of over £2m inside 6 months for a SaaS SME, secured sales with key distributors and channel partners, with purchase orders value of £500,000 achieved in 90 days for a UK wearables brand, grown a Scale-up’s sales pipeline from £4m to £18m in 9 months and many more. More information here: www.bridgeheadagency.com