CHALLENGES IN PRODUCT DEVELOPMENT:
The cost of manufacturing,
distributing and marketing the product.
The actual physical location of
production plants.
Currency Exchange Rates - US export
companies are benefiting from a relatively low US Dollar price during the 2010s. Most hearing aid companies,
however, these are based in Europe and therefore the high value of the Swiss
Franc and the Euro relative to other currencies must be considered. This make
imports into the United States from these
countries
expensive, but exports from the US relatively cheap to other nations. This has
to do not just with demand for a particular product, but also with
macroeconomic demand for national currencies, which affects inflation and, by
extension, pricing. Currency fluctuations also make it very difficult for
companies to make long-term decisions – such as building large factories in
global markets. For example, the costs of production may be cheap today, but
they could be expensive in the future, impacting upon the price that a
manufacturer is forced to charge.
The price
that the international consumer is willing to pay for the product.
The
manufacturer’s business objectives. For example, large international companies
such as Starbucks may be willing to operate at a loss in some locations because
they need a local presence to maintain their economies of scale, as well as
their reputation as a global player. Some hearing aid manufacturers act
similarly in order to become “world players.”
The price that competitors in
international markets are already charging.
Business environment factors such as government policy and taxation.
National Market Size – A
company will often attempt to use the potential volume of sales to estimate the price at which it will need to market a
product to break even. For larger countries with the potential for more sales,
this price may be set lower; for smaller countries, the price may be higher.
Cultural Differences – One of
the more complicated factors in international pricing is cultural variation among companies. Cultural variations that
affect pricing can take many forms, most of which have to do with how members
of certain cultures perceive the value
of
certain products, which in turn affects how much they are willing to pay for
them. Some cultures do not value amplification products and they are seen with
significant stigma. Thus, hearing aid prices can be greatly affected depending
upon whether a manufacturer’s device is large and obvious or invisible.
Regulations – When setting prices in other
countries, companies must research all national
regulations relevant to their product, as many countries set price ceilings as
well as price floors on certain products. Others require Value Added Tax (VAT)
and other taxes that must be considered during the pricing decisions.
NINE STEPS TO AN INTERNATIONAL MARKETING STRATEGY:
As
technology breaks down geographic and cultural communication barriers, even
small businesses can often tap into the global marketplace. If you think your
business is too small to pursue international business opportunities, think
again. Get a jump on those opportunities by following the 9 steps outlined
below.
Research
Unless
you spend excessive amounts of time in foreign countries or soak up knowledge
like a Jeopardy Champion, you’re probably not able to make an informed decision
about a global strategy without doing your homework first. Start with the
low-hanging fruit: talk to your coworkers, peers, family and friends. Find out
what you can about countries and markets with the greatest potential. Read
relevant print and Web publications voraciously (I prefer e-marketer,
Economist, Wall Street Journal and Yahoo! for general business and market
research). Compile information about various opportunities and determine which
markets have the greatest overall potential (in case you’ve been hiding in a
cave, here’s an emerging and growth market cheat sheet for you: China, India,
South America, Russia and The Middle East).
Build
Most
small to medium-sized businesses do not have the resources on staff to
undertake a global market strategy. Assuming there are sufficient opportunities
abroad, it’s time to determine how to develop appropriate resources (i.e.
in-country sales and support, logistics and fulfillment). In the build vs. buy
decision, many companies prefer to minimize financial risk by partnering with
companies that have extensive experience within the target market to provide
those resources. While partnering minimizes risk, there are drawbacks, such as
lack of direct management oversight. Those negatives can be alleviated by
hiring employees who have the education, experience and native language skills
relevant to your target market. International students are excellent resources:
they are educated, affordable, multi-lingual and usually have some relevant
work experience. The potential downside is that you’ll probably have to
navigate through a bushel of red tape in order to secure work visas.
Partner:
While
your core business and marketing team may already be in place, there are a
variety of reasons to explore additional partnerships. Companies specializing
in marketing, logistics and customer service are excellent additions to the
growing team. Partners within the target market may have relationships with
your potential customers that can be leveraged for business development. For
instance, we’ve partnered with a homeland security and business consultancy,
Eminent Logic, to help penetrate into the Middle Eastern markets. In return, we
introduce them to local companies we know that can further their business
objectives.
Network:
Alternative
business development strategies include attending, sponsoring, and
participating in industry networking events and conferences. Look into joining
industry associations that have a footprint in your target markets, or that are
native to the target market. Web-based networking groups (e.g. LinkedIn) can
also help expand your network.
Market:
Now that
you’ve built out your infrastructure, trained and deployed a team, and modified
your offering and marketing collateral, you’re ready to turn on the fire hose.
Two of the most effective forms of outreach are search engine and email
marketing. Internet access is everywhere, which means everyone has access to
search engines and email. The best way to build a house list of potential
customers in your target market is to optimize your international Web site for
search engines and offer visitors an incentive to provide their email address.
Once you’ve got their permission to contact them regularly, build a
relationship and convert site visitors and email subscribers into customers.
Travel:
Over
time, cold leads will become hot, and those hot leads will want face-to-face
meetings. Its decision time: are you ready to invest in a global travel expense
account? If so, be prepared to reel in the business, as most of the world works
on a handshake and face time is critical. Turn your business trips into
tax-deductible vacations and see the world while you’re at it.
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