Developing Your International Market Strategy

Steps to
Develop an
International
Strategy
Stephen N. Davis
“Partnering With Clients to Drive
Sustainable Profitable Growth”

Anyone Can Go Global

Doing it
Profitably
Is the Real
Challenge

2000 - 2009 © CXO Advisory Group

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
Canada, UK,
Nordic, the Germany, Spain,
Language Commonwealth
Netherlands Eastern Europe
Countries
Netherlands, Nordic,
Similarity to US UK, Australia, New
Canada Benelux, Germany,
Business Models Zealand
France
Canada, UK,
France, Germany,
Employment laws Australia, New Nordic, Netherlands
Italy
Zealand
Canada, UK,
Market Size Italy, Spain, Nordic Eastern Europe
Germany, France
Canada, UK,
Least Amount of Nordic, France, Belgium, Italy, Greece, E.
Corruption Netherlands, Spain Europe
Germany



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.


Know Your Customers Buying Process

Sales Cycle Identify Prospect Qualify Proposal Close Deliver
Stage

Discover Need Seek Solution Review Vendor Agree on Check Start
Materials Solution and References Implementation
Identify Research
Project Specs. Validate Assign
Business Goals Determine Total
Find Vendors Resources
Scope of Project Coordinate Proposal
Customer’s Quantify Impact Get Information Estimates
Buying Process Start Training
& ROI RFQ
Cycle Choose Vendor
Confirm timing & Manage Project
Objective Timing &
Budget Sign off
Budgeting Pay Bills
Select Vendor Approvals
Contract signed
Purchase Order


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  Brokers
 Strategic partners  Franchises
 Corporate resellers  Telemarketers
 Master or local  Internet sites
distributors  e-Marketplaces
 Integrators  Retail
 Value-added resellers  Agents (consultants,
 Manufacturer’s agents 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-
Low Low Low Medium Low High
House Expertise

Access to New Partners Low Medium Low Medium Medium Low

Risk Medium Low Low/Medium High Low High

Hands-On
High Medium High Low Low Low
Sales/Marketing Support


Channel Value Add

High
“High Touch
Channels” Field
Sales
Value VAR’s
Add Dis-
“Low Touch
Of Sale tributors
Channels” Retail
Stores
Tele-
marketing
Internet
Low

Low High
Cost per Transaction


Direct Sales

Pluses Minuses
 Dedicated  Expensive!!!!
 Control message to the • Accounts receivable
market • Inventory
 Customer contact
• Expenses
 Company loyalty
• Employment costs
 Control the Brand
 Slow ramp up
 Priorities (focus) or
 Limited coverage
products
 Labor laws


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  Marketing Obligations
 Acceptance  List Price of Product
 Grant of License  Performance Requirements
 Terms  Warranties
 Payments  Limitation of Liabilities
 Bookkeeping Requirements  Development Support
 Ownership  Rights to Updates
 Use of Trademarks  Termination
 Training  Source Code Access
 Decision Making Authority


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
Strategy Program Execution
 Goals  Coverage model  Media Campaign
 Target  Value proposition  Communication
Market  Business rules  Incentives
 Product  Sales model  Education
 Competition  Pricing  Outsourcing
 Channels  Sales Support
• Roles model
• Alignment  Customer Support
Model
 Budget


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
Fully-owned
operating subsidiary
in the territory
Commercial partnership
with export distributor
in the territory
Export distributor
supported by
dedicated staff
based in the territory

Export distributor
Simple Export supported by
Distributor dedicated headquarters-
based staff


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
Lost Market Markets When
Opportunity the US Market
is Doing Well.


Questions


Contact Information:

Stephen Davis
Interim COO/VP Sales & Marketing |
Business Consultant | Sales Channel and
Business Development Expert | Author &
Speaker

“Partnering With Clients to Drive
Sustainable Profitable Growth”

Phone: (508) 528-7571
Email: sdavis@cxoadvisorygroup.com
Website: www.cxoadvisorygroup.com
Linkedin: www.linkedin.com/in/stephendavis
Twitter: twitter.com/stephendaviscxo

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


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Developing Your International Market Strategy

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