A well-known marketing mantra is “know your customer, have the right message and deliver that message at the right time.” This may sound simple but the process for how to execute this concept successfully is often misunderstood.
Companies often spend millions of dollars making sure these three elements are aligned. In domestic markets there is an inherent understanding of the customer. However, foreign markets pose the added complexity of language, culture and social structure, all of which are factors in an accurate customer profile.
When doing business in a foreign market, it’s important to have a detailed understanding of how local customers make decisions to buy goods or services. The term customer applies for business-to-business transactions as well as consumer and retail commerce. Successful companies are those which conduct comprehensive research in each new market in order to produce a dynamic picture of the local customers for their product or service.
First, consider the market demand for your product or service in other countries. Needless to say, people in different places have different needs. Just because your business is doing great in your home country does not automatically mean it will be a hit everywhere else. An easy way to avoid making such mistakes is to first find out what kinds of products and services are in demand in the countries you are planning to expand your business.
Quantitative research gives statistics on customer priorities, preferences and needs around the product category. This data identifies important risk factors associated with the customer and the product that must be addressed or at least acknowledged. Quantitative research also helps identify key success factors that match the customer to the product. For example, this research can help establish pricing sensitivities or can establish a ranking of product attributes.
Qualitative research provides an opportunity to talk directly to the customer, which is invaluable in foreign markets. Focus groups and in-depth interviews are common formats for this research. This research explores the language, cultural and social considerations of the potential customer profile and identifies how purchasing decisions are made. In new markets, the right research can also uncover potential barriers to overcome.
Successfully selling your products and services in a foreign market may also require product adaptation. For example, you may need to adapt your product to the local environment to ensure the product meets local cultural and regulatory requirements. This may include features or functions (adding or subtracting ones needed in that specific market), the packaging (smaller or larger size as well as the type of packaging you use), the price (given the different adaptation costs and packaging quantity), the installation method or use of the product, the material with which the product is made (try to find local readily available substitutes for core materials), or the way the product is sold or distributed.
Working with Local Consultants
It is also common to hire local consultants who work in the target business sector and who are experienced in the local language and customs. The consultant can help you to identify the right questions to ask the customer and to assure that all product descriptions are detailed and accurate.
Moving into new markets can be challenging for any business. Understanding the customer takes time, money and resources but is a basis of many other business decisions. The more a company knows about the customer the better it is equipped to define revenue potential, develop the right product positioning and determine what will sell the product. Also, for companies seeking investors for their market expansion, this information helps build a compelling story and investor confidence.