Launching into conquering other markets requires well-designed sales strategies, including intelligent integration into a general out-of-the-box plan that looks at aspects of all kinds related to the internationalization project. And, since there are no successful formulas, but maneuvers adapted to the circumstances of the company and markets, our goal will be to use them to minimize risks when starting marketing. Randall Castillo Ortega, an expert in business management and the import/export industry, provides insight into how an exporter can gain international success for his or her business.
There are different variables that the company has to take into account when entering a market. One of them is how its product will reach the end customer. This question corresponds to the concept of distribution and should not be confused with the transport network or logistics of a product. However, direct sales from the origin country are the most suitable form of market access for a first prospect if the market allows it.
This is because there are lower risks and investment than other entry mechanisms. The company also directly controls the process and the net margin of sale is for the company. However, on the other hand, there is less closeness and knowledge of the market and home staff are needed to manage and track markets. There is possibly additional wear and tear of the company and the international department, as well.
If direct exports aren’t the ideal solution, the company can have an agent in the destination country that promotes sales of the product by searching for customers and signing sales contracts on behalf of the product in exchange for a sales commission. Explains Castillo, “This agent usually has its own contact base and technical knowledge of the sector in the destination country, so reaching contacts is faster. It is a cost to the company that is reflected in a % commission on sales, which entails a commercial relationship and reversible collaboration formulas. Some control can be exercised over brand policy, logistics and prices.”
Perhaps full implementation in the destination country is possible. The main options often involve opening a subsidiary or branch in the new market, or creating a Joint Venture with a local partner. Having a physical presence may be necessary because of market demands, but this pathway requires greater effort and investment in resources. In another post, we’ll talk in more detail about each of the access and advanced development options in international markets.
Any of the above types can be perfectly suitable for introduction or implementation in a market. Although it is most common to move in a staggered way, it depends a lot on the company, the product, the customer and the market, among other variables. What is certain is that, before launching into this challenge, you have to analyze very well the capabilities of the company and consider whether the competitive advantage remains abroad, as well as carry out a long-term strategic plan.
There are different ways of entry, including export, joint investment, strategic alliances or local presence, which leads us to different sales strategies. They are ways of doing business that are realized in formulas whose valuation corresponds to the company, as well as stipulating the most appropriate marketing actions. It is a question of assessing the risk factors and investment you wish to make and choosing the right penetration mode based on the objectives and resources of the company. In addition, weaknesses and strengths should be taken into account in identifying the appropriate sales strategy for each destination country.
Export could be seen as a simpler way, as it requires less investment, and even then used as a first step towards advancing internationalization. A passive export would begin and gradual progress would be made. Still, let’s not underestimate the importance of exhaustive planning also to start exporting. Asserts Castillo, “Designing an export sales strategy requires great business involvement at the economic and human resources level.”
Local presence, on the other hand, requires sufficient market share to be able to bear the costs of implementation, so it is not always the best option if you are looking for a progressive and stable expansion. And, whatever it may be, planning a sales strategy will involve deciding what the formula for product introduction will be, either through the export formula, manufacturing or, for example, with assembly in the destination country. The company’s marketing plan will eventually be a sum of decisions internally and externally, in which the different sales strategies will have to be developed simultaneously, and at the same time, they will fit into a global whole for the benefit of the company. Of course, both the overall marketing plan and the different strategies will have to be adjusted to the needs.