How to... Tackle Foreign Ma

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How to... tackle foreign marketsDon't leave your brain on the plane when plotting a marketing drive in unexplored

territory - without real empathy for new consumers you will soon go astray

Do some detective work

If you want to expand internationally, you have to do your homework, says

Richard Perry of the UK India Business Council, an organisation that forges links

between businesses in the UK and India. You need to know what youve got to

offer and who wants to buy it. Youve got to have good marketing and good

segmentation and thats true for all markets around the world.

Tesco spent 20 years watching the US market before finally launching its Fresh

& Easy chain of convenience supermarkets on the west coast last December. A

team of 20 executives was dispatched to the US to carry out in-depth research

and to visit every rival. The company hired a team of anthropologists to live with

consumers for two weeks and analyse what they bought and why. It also built a

mock store and asked selected consumers to try it out. From its research,

Tesco discovered among many other things that US consumers were less

bothered by the selection of wines on offer, but wanted better quality meat than

UK consumers.

Its not surprising that Tesco invested so much time and effort in researching the

US: expanding into overseas markets is notoriously difficult and many major

retailers have failed. Sainsburys pulled out of Egypt in 2001, Marks & Spencer

closed its stores in continental Europe the same year to focus on its then

struggling UK business, and Tesco itself pulled out of France in 1997.

More recently, B&Q withdrew from the South Korean market after only two

years because of soaring property costs and difficulty in finding suitable sites.

Thorough market research before a move overseas can pay dividends. Tescos

in-depth surveillance strategy has helped it build up more than half of its retailing

space overseas. In addition to its US presence, it has 670 stores in Europe and

more than 700 in Asia.

And its not just for the big players. Even small companies can make an impact

overseas. London-based bag maker Knomo, founded at home by co-director

Howard Harrison, now sells its stylish laptop bags in 20 countries. Harrisonsought the help of government export body UK Trade & Investment (UKTI) to

help him research potential foreign markets.

Without UKTI, we would not be as far ahead as we are now, says Harrison.

The international trade adviser allocated to us, Gail Williams, has been

Related article

Culture clash

World of Opportunity

"You must immerse

yourself in the local

culture to have any hope

of success"

w to... tackle foreign markets - The Marketer magazine http://www.themarketer.co.uk/articles/how-to/how-to-tackle-foreign-m...

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extremely helpful in advising how to appoint agents and distributors, and has

helped us with a selling strategy that has proved both fun and exciting. Weve

also commissioned Overseas Market Introduction Service [OMIS] reports for

Japan and the US.

Avoid culture clash

Lots of companies fail when they take their products and services abroad

because they think, oh its just the same as home and if it isnt then it should

be, says Allyson Stewart-Allen, director of International Marketing Partners, acompany that offers advice to businesses on marketing overseas.

Stewart-Allen says you really have to immerse yourself in the local culture if you

are to stand any hope of success. No matter how much you localise your

advertising or tweak your packaging, if you dont understand the local culture you

will fail, she says flatly.

Take China for example. China and the West, a report from Mintel, says there is

no culture of borrowing money in China, so many western-style financial

products would struggle to find a market. It adds that fresh food dominates

stores to an extent that is unthinkable in the west and canned or packaged meat,

fish and vegetables are simply not available.

In India, McDonalds abandons uniformity in favour of local preferences. It

doesnt sell any beef products there because cows are considered sacred, so

instead its product range includes vegetarian products such McAloo Tikki (a

spicy potato burger) and the Paneer Salsa McWrap.

University of Essex international marketing and entrepreneurship programme

director Madhumita Banerjee points to other cultural differences in India. Its not

in the Indian psyche, for example, to buy flat-packed furniture to assemble

yourself consumers expect the company to come to their homes and do it.

Companies that have succeeded in India have created new offerings that adapt

to market needs Nokia phones have an inbuilt flashlight that is very useful in

India because the electricity supply is unreliable.

However, there are lots of examples of really big companies that get it wrong,

says Stewart-Allen. For example, Starbucks pint-and-a-half venti coffee launch

failed in the UK and other European markets because European consumers are

turning against supersizing and excess.

Know local rules

Infiltrating overseas markets can be fraught with difficulty because business

culture is often completely different. Patent law in particular can vary and in

some cases is non-existent.

Sharyn Wortman, founder of Today Was Fun, a company that sells speciality

teas around the world, says: Each market is different and, to be honest, Russia

is still a complete mystery even though we are doing well there. There is a lot of

corruption.

Manchester-based Photolinks creative group director Jayne Riley found China

challenging: We invested 150,000 trying to operate in China, but simply

couldnt make it work for us its such a difficult business environment and they

simply didnt understand creativity in the way that we do.

India, on the other hand, is family focused. UK-based branding agency Evolve

Creative now does 60 per cent of its business in India. Its managing directorBabu Datta says: Its a very different environment. Some 50 per cent of Indias

top 50 businesses are family owned and operate in a totally different way from

corporates over here, so you have to get to grips with that.

It is best to get expert advice on what is acceptable when moving into a new


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market. Richard Lewis, author of When Cultures Collide, a guide to doing

business around the world, suggests you adopt the when in Rome . . .

approach.

Entertaining in China, for example, should be lavish. Marketers should also be

aware that the Chinese rarely say no, but instead only hint at difficulties.

Swedes, in contrast, dont like any form of showing off and regard a compromise

as a good thing, preferable to a negative outcome. Brazilians often interrupt

without intending to be rude, while in the Middle East personal relationships

rather than official channels are used to further business interests.

Pick local partners

Part of building a brand overseas is ensuring you have the right distributors,

business partners and agencies, says Stewart-Allen. Success depends on how

good you are at building an infrastructure. By that I mean people, networks and

communities that can help your company grow. You really need to have strong

relationships.

The University of Essexs Banerjee explains that in India a foreign brand is not

necessarily an advantage because consumers trust reputable local retailers

instead.

Local brands have a better understanding of the market and the consumer and

are used to working within the constraints of the country. Therefore much

international branding is being done on a B2B rather than B2C level, she says.

Wortman says she built up relationships with competitor suppliers and

distributors: When we entered new markets we looked at other speciality food

companies that were exporting to see who they were working with so that we

could build the right relationships.

Its crucial to get legal support, advises Riley of Photolink: The one piece of

advice I would give is get yourself a bloody good lawyer. We have a brilliant

Indian lawyer who is now on our board. He is a great networker and has

introduced us to all sorts of useful contacts.

Channel your efforts

Without the right sort of marketing, even strong brands will fail in new markets.

You need to be clear about what works in what country and consider a whole

range of factors such as what type of advertising and media is likely to be most

effective and even the size of your product. In India, for example, consumers

want to buy single sachets of shampoo rather than a bottle that will last for

months. Your co-ordinating agency will have to be flexible because one

approach rarely suits all markets.

According to Stewart-Allen, localising is totally fundamental from the copy in

your adverts, to your product size and the colours you use, you really have to

understand the local market.

However, some niche brands can buck the need for localisation and have even

managed to cash in on their foreignness.

Wortman has built a strong UK brand for her Tea & Philosophy range, which

includes Happiness, Inspiration and Sleepy varieties. The teas are stocked in

upmarket retailers such as Harrods and Harvey Nichols.

This has acted as a shop window for international buyers who come over toLondon to see what is new and then have phoned and asked us to supply them,

she explains.

Tea & Philosophy has managed to market itself on Englishness overseas. When

we started targeting overseas markets we deliberately went for markets where


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English is widely spoken, such as Scandinavia, so that we didnt have to change

the packaging, says Wortman.

In Russia, there is a real cachet about English luxury products and we found

that in upmarket stores people were happy to buy our products with English

copy on them, even if they didnt understand it."

Helen Jones is a freelance journalist who writes for business titles including The

Wall Street Journal


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