Developing Your International Market Strategy

Stephen N. Davis

“Partnering With Clients to Drive

Sustainable Profitable Growth”

Steps to Develop an

International Strategy

2000 - 2009 © CXO Advisory Group

Anyone Can Go Global

Doing it Profitably

Is the Real Challenge


Common Exporter Mistake #1

Insufficient Commitment By

Management



Going Global Before Domestic Market is Fully

Established



Failing to Develop A Full

Go-To-Market Plan


Plan Your Entry into the Channel

“If you don’t know

where you’re going

you’ll probably

wind up

somewhere else”


Market Selection

So Many Choices



Using Wrong Criteria for

Selecting Markets to Enter



Trying to Enter Too Many New Markets

at One Time


Selecting Your Market: Ease of Entry

1 2 3

Language

Canada, UK,

Commonwealth

Countries

Nordic, the

Netherlands

Germany, Spain,

Eastern Europe

Similarity to US

Business Models Canada

UK, Australia, New

Zealand

Netherlands, Nordic,

Benelux, Germany,

France

Employment laws

Canada, UK,

Australia, New

Zealand

Nordic, Netherlands France, Germany,

Italy

Market Size Canada, UK,

Germany, France Italy, Spain, Nordic Eastern Europe

Least Amount of

Corruption

Canada, UK,

Nordic,

Netherlands,

Germany

France, Belgium,

Spain

Italy, Greece, E.

Europe



Failing to Establish a Budget Up Front


Creating Effective Budgets

A program without a budget is a wish

• Cancelled at any point

• Not credible to reseller

• Cannot be strategic or justified to management

• Costs cannot be measured or controlled

Must estimate costs of program design, implementation

and management

• Coverage, sales model, support model, value proposition

• Calculate as both cost of sales and return on investment



Not Localizing The Product


Localization - Marking

Requirements vary from country to country

Made in USA has different meanings around the world


Localization – Labeling, Packaging & Documentation

Requirements vary from country to country

Language • May have Multi-

Lingual requirement Country of Origin May be layers of

Labeling BEWARE: Regulations

and Reality may DIFFER


Localization - Standards

US Standards are NOT

universally accepted

Know the Standards you

have to Meet

CE Mark – European

Union

CCC – China

NOMS – Mexico

ISO



Running Afoul of US Export Regulations



Selecting the Wrong

Distribution Channel


Sales Channels – The Reality

“A product with better distribution will

always win over a product with poor

distribution or customer access”

It’s not fair. It’s not right.

But, it’s reality.


Sales Cycle

Stage

Know Your Customers Buying Process

Customer’s

Cycle

Objective

Discover Need

Identify

Business Goals

Quantify Impact

& ROI

Deliver Close Proposal Qualify Prospect Identify

Seek Solution

Research

Find Vendors

Get Information

Review Vendor

Materials

Determine Total

Scope of Project

RFQ

Timing &

Budgeting

Agree on

Solution and

Project Specs.

Coordinate

Buying Process

Confirm timing &

Budget

Select Vendor

Check

References

Validate

Proposal

Estimates

Choose Vendor

Sign off

Approvals

Contract signed

Purchase Order

Start

Implementation

Assign

Resources

Start Training

Manage Project

Pay Bills


Channel Strategy

Must start with the customer How many channel partners do I need? What channel partners should I have?

• Build a channel partner profile • Link to end-user targets • Fit with existing channels • What role do they play?

• Influence • Sales • Support • Technical

How do I choose them? How do I measure them? How do I generate business for them? Do the financial requirements make sense for our company?


Distribution Channels - Examples

Direct sales

Strategic partners

Corporate resellers

Master or local

distributors

Integrators

Value-added resellers

Manufacturer’s agents

Brokers

Franchises

Telemarketers

Internet sites

e-Marketplaces

Retail

Agents (consultants,

affiliates, etc.)


Comparison of Major Channels

Retail Agent/Rep Distributor/VAR Acquisition Joint Venture Subsidiary

Time to Market Slow Slow Medium/Fast Medium Medium Slow

Management Control Low Medium Low High Medium High

Brand Control Low Low Low High Medium High

Cost of Sales Medium Low Low High Medium High

Development of In-

House Expertise Low Low Low Medium Low High

Access to New Partners Low Medium Low Medium Medium Low

Risk Medium Low Low/Medium High Low High

Hands-On

Sales/Marketing Support High Medium High Low Low Low


Channel Value Add

Value

Add

Of Sale

Cost per Transaction

High

Low

High Low

Internet

Tele-

marketing

Retail

Stores

Dis-

tributors

VAR’s

Field

Sales

“Low Touch

Channels”

“High Touch

Channels”


Direct Sales

Dedicated

Control message to the market

Customer contact

Company loyalty

Control the Brand

Priorities (focus) or products

Expensive!!!!

• Accounts receivable

• Inventory

• Expenses

• Employment costs

Slow ramp up

Limited coverage

Labor laws

Pluses Minuses


Joint Venture or Strategic Partnership

Quick penetration – less risk

Established market presence

Provides localization of product

Handles all marketing, sales, distribution &

support

Provides ongoing market analysis

Provides ongoing competitive analysis

Usually won't carry competing product

Tough sale – long sales cycle


Approaching a Potential Joint Venture or Strategic Partner

Be Ready to Explain Key Product Advantages

Do Your Homework

• Why should they be interested?

• Fills competitive hole

• Enhances existing product line

• Prevents having to compete against you

• You could develop market in your home country for their

products

How easy it will be to work with you

Support you will give them

• Technical

• Training


Key Issues Licensing Agreement

Specs & Deliverables

Acceptance

Grant of License

Terms

Payments

Bookkeeping Requirements

Ownership

Use of Trademarks

Training

Decision Making Authority

Marketing Obligations

List Price of Product

Performance Requirements

Warranties

Limitation of Liabilities

Development Support

Rights to Updates

Termination

Source Code Access


Distributors

Sells to other channel players within designated

area

Takes title to goods and is compensated by mark-up

upon sale

Sells suppliers goods to his own customers

No authority to act on your behalf

Maintains Inventory

Sells in original packaging

May or may not provide after sales services

Many products are taken on consignment basis


Distributor Network Issues

Exclusive v’s non exclusive

Territory covered

Period, renewal, notice to terminate

Performance requirements (quarterly/annual)

Poor performance cure periods

Cross territory sales

OEM sales

Global account sales to multi national corporations

Appointment of additional distributors


Manufacturers Agent/Commercial Agent

Alternative to own sales force

Both authorized to solicit orders in designated area

Receive salary or commission

Usually bear no credit risk

Maintains no inventory

Requires same support & training as internal salesforce

Carries several lines

References, References, References


Agent Issues

Exclusive v’s non exclusive

Territory covered

Commission rate

Period, renewal, notice to terminate

Performance requirements (quarterly/annual)

Poor performance cure periods

Cross territory sales

OEM sales

Global account sales to multi national corporations

Appointment of additional agents


The International Marketing Plan

Program

Coverage model

Value proposition

Business rules

Sales model

Pricing

Sales Support

model

Customer Support

Model

Budget

Strategy

Goals

Target

Market

Product

Competition

Channels

• Roles

• Alignment

Execution

Media Campaign

Communication

Incentives

Education

Outsourcing


Is Your Buyer Package up to Snuff?

Marketing materials

Localized website and URLs – CLAIM YOUR NAME

Price lists

Outline of your marketing campaign – Demand Creation

Product samples – Packaging (LOCALIZED)

MDF funds and campaigns

In-store merchandising

Prospect & customer correspondence

Sales training for their personnel

Sales support

End user training

End user support


Overseas Distribution Maturity Curve

Simple Export

Distributor

Export distributor

supported by

dedicated headquarters-

based staff

Export distributor

supported by

dedicated staff

based in the territory

Commercial partnership

with export distributor

in the territory

Fully-owned

operating subsidiary

in the territory


Key Points That Can Make a Difference

Select your channel partners with care

Develop a mutual agreed performance plan that is measureable

Have realistic expectations

Top management commitment

Focus, Focus, Focus

Long Term View

Clear understanding of end-user targets and their alignment with channel partners

Develop comprehensive business rules for managing program processes


Key Points That Can Make a Difference

Take inventory of your partners • Does the 80/20 rule apply?

• Build profiles based on successful partners

• Align internal resources based on contribution

Invest in your partners • Marketing

• Training

• Support

• Web

Use the Internet to enhance partner sales

Review your channel strategy yearly • Identifies potential destructive channel conflict

• Tune channel support programs



Ignoring Your International

Markets When the US Market is Doing Well.

Lost Market

Opportunity


Questions

Stephen Davis

Phone: (508) 528-7571 Email: [email protected] Website: www.cxoadvisorygroup.com Linkedin: www.linkedin.com/in/stephendavis Twitter: twitter.com/stephendaviscxo

Interim COO/VP Sales & Marketing |

Business Consultant | Sales Channel and

Business Development Expert | Author &

Speaker

Contact Information:




Driving Profitable Growth

We help companies optimize business development and marketing; accelerate sales; and seize the most attractive growth opportunities.


The CXO Advisory Group

CXO Advisory Group is a strategic operations advisory

and management firm comprised of proven C-level

executives with both breadth and depth of experience.

CXO Advisory Group Team members have achieved

success in positions ranging from: President/CEO to

COO, and VPs of Sales, Marketing, Corporate

Development and Human Resources.

Has proven success in business development and in

building US sales and distribution channels


How Can CXO Help You?

Business Strategy Services

• Audit business practices and organization

• Evaluate product and pricing strategies

• Evaluate effectiveness of sales channel

• Assess effectiveness of existing sales and marketing

programs

Market Entry Program

• Analyze competitive landscape

• Market launch strategy and plan

• Channel strategy and programs

• Establish sales channels

• Generate sales and manage relationships

• Identify and develop strategic partnerships



Sales Channel Management

• Review and revise sales channel strategies

• Channel partner identification, prospecting and recruitment

• Eliminate channel conflict

• Channel contract development and negotiation

Interim Management Resources

• Interim CEO, COO, CMO, CSO

• Interim VP of Sales and Marketing

• Consultant on staff

• Launch team coaches



Venture Advisory Services

• Fine tune operations, business strategy and market entry

• Assist with due diligence

• Strategic business assessment of portfolio companies


Driving Profitable Growth

Stephen Davis Interim COO/VP Sales & Marketing |

Business Consultant | Sales Channel and

Business Development Expert | Author &

Speaker

Contact Information:



Phone: (508) 528-7571 Email: [email protected] Website: www.cxoadvisorygroup.com Linkedin: www.linkedin.com/in/stephendavis Twitter: twitter.com/stephendaviscxo