How to succeed in a new market
A major part of getting your export strategy right is ensuring that you know the market you're going into. However, this can be easier said than done when you're dealing with time zones, physical distance, and cultural or language barriers. How can you carry out effective market research in another country, and ensure you know the market inside out before getting your products out there?
"Getting the product-market fit wrong can be very costly for your company, and the key to success is held in adding value to the new market you are venturing in to," advises Ricky Kothari, founder of T-Sticks of London. "From exporting to countries such as Thailand, Romania and Italy, we have learned the importance of realising that no two foreign markets are the same. We hope that from our own lessons learned you can take something away too."
Here are Ricky's top tips on scoping out a foreign market - and succeeding there.
Look at your export potential
Exporting is great for reducing your reliance on UK-based consumers, but it is not a decision to be taken lightly. Indeed, it is highly unusual for startups to launch into exporting when trying to establish traction in the UK. You will need to assess whether your profit margin will be large enough to cover the costly business that is exporting, and whether your product will fit into a country’s cultural norms (more on this later). Although it is always wise to be mindful of the pitfalls, do not lose sight of the numerous benefits exporting can bring, including offsetting any diminishing demands in the UK by sales overseas.
Determine which market sector you want to merge into
Consider the sector of the market that will work best for you. For T-Sticks this has meant testing and comparing the food services (HORECA) industry versus retail. Do not just rely on preconceptions- do your research. You will need to think about what sort of need your product satisfies, and also perhaps where you may have some existing relations or contacts.
Market research, market research - and market research some more
Once you have established the above, you will need to do your research. The first step is to find out more about the market you have decided to move into. A lot of the preliminaries can be done via online research or even, as we did, by going into the British Library and getting hold of country-specific reports - for instance Mintel (accessible in participating university libraries) or Euromonitor reports. T-Sticks then conducted various types of market research, including focus groups and trade shows. Although the latter may not be appropriate for all companies (it can be expensive), it's a good way to get instant feedback on your product from potential buyers and build a list of contacts.
There are some other ports of call for help in this area, including UKTI (UK Trade & Investment) who can help with advice on specific countries and markets, and also British embassies abroad. UKTI work with third parties who can help to undertake market research for a fee. Then an OMIS (Overseas Market Introduction Service) report is conducted. We did this for the China market and are exploring whether to do this for the USA. Although this is very useful, it cannot beat visiting the actual country and taking part in a trade show.
Don't forget cultural considerations
Understanding the culture of the market you're moving into is a very important step before exporting to a new market. Social symbols can vary immensely from one culture to another - what is seen as essential in one country may be a luxury or excessive in another. Understanding what your product represents in a different culture will help you in the long term when marketing abroad. T-Sticks found that the drinking habits around the globe are diverse and can change the way in which a consumer will interact with our tea. Understanding this is important, as you may need to revisit your marketing strategy. However, this is certainly not to say that cultural differences cannot work in your favour! We found that there was a love of British brands abroad and quintessentially British products were certainly on-trend.
Price your product
Once you are sure that your new market will accept your product with open arms, you will need to think about pricing. To ensure you will establish a good profit margin when setting your price you should first understand the costs involved just to get your products into a different country, including shipping and local overheads. To avoid under- or over-pricing you must manage your partners closely and set your pricing with the distributor. This also ensures a fair-pricing-for-all policy. Without this your company could be seen as not playing fairly, resulting in a lack of consumer confidence.
Final thoughts and top tips
Something we have taken away from exporting is that, if you're selling an innovative product, you should at least apply for trademarks and consider IP (Intellectual Property) protection in each oversea market. This can be done through contacting the UK Intellectual Property Office. Always be confident in your back-end processes and manufacturing and do your due diligence on partners and distributors outside of your company. But most of all, enjoy exploring new markets and seeing your company grow globally!
