Entrepreneurs and managers of successful companies possess an ability to see the company as a whole and to think about its development over the long term. They constantly seek new opportunities in related markets, products and services, where the firm’s distinctive strengths can be applied. They are also obsessed with competition.

They use strategic and operational planning to define and understand the business and how forces operating in the market influence it. They then use this understanding to analyze options and determine what must be done to achieve the company’s vision.

The result is a corporate strategy and a business plan that not only responds to current circumstances, but also anticipates the future. Together, they embody a vision of where the business is evolving. Without a vision, and the leadership to rally others around it, the organization is likely to be reactive, suffering the consequences as a result. By contrast:

Visions are inspiring—they challenge employees at all levels in the organization and motivate them with a clear sense of purpose.

Defining your business’s purpose

A vision statement is usually accompanied by a mission statement, which addresses the nature of the company’s business. The fundamental prerequisite for any corporate vision is a definition of its business. This means defining the area of activity in which it specializes, who it is trying to serve and how it is trying to serve them. This may seem like an obvious point but companies frequently misjudge the nature of their business.

A classic example is offered by the railways which experienced a steady decline over many decades, in part because they kept thinking of themselves exclusively in terms of the rail business and oriented their actions toward saving that industry. They did not realize that they had more to gain by thinking of themselves as being in the transportation business, with rail links as merely one of many means of pursuing that business.

By failing to broaden their perspective, railways failed to take advantage of emerging opportunities in bus, truck and air transportation. The use of multimodal transportation and inland container ports is a belated recognition by the railways that they really are in the transportation business.

However beautiful the strategy, you should occasionally look at the results.

Winston Churchill

One way of reaching a useful definition of a business is to determine which industries share the same customers and the same competitors. Do the products or services offered by these industries provide similar functions, styles, features and benefits? And do changes in the marketing strategies of firms in one industry affect the strategies of firms in the other industries? If the answer to these questions is yes, then the firms under consideration are really in the same business.

A prime example of this would be the telecommunications industry. Not too long ago, cable TV companies defined themselves as being in the entertainment industry. First they recognized that they could offer high-speed Internet service over the same cable as the TV signal – they redefined themselves as being in the information business. Then they realized that the voice component of the Internet can be used as a cheaper version of a telephone call.

Today they describe themselves as being in the telecommunications business which encompasses voice, video and text. This example highlights the need for a business vision that can project and anticipate developments not only in the company’s own industry but also in others.

Your customers’ business is your business

Zeroing in on the firm’s current customer base plays an important role in defining a company’s business. Knowing its customers, the firm can determine what they value today and anticipate what they will value tomorrow. It can then develop products or services in a way that meets the needs of customers.

This type of analysis can be quite an eye-opener. For example, it has led many high-tech manufacturers to realize that they are not just selling equipment but also the ability to link and integrate that equipment into comprehensive solutions. Indeed, the provision of total solutions has increasingly taken over what used to be the simple sale of electronic components. The classic example of this is IBM which no longer sells just business machines, but now it sells total office solutions that it installs and maintains.

A definition of your business should also distinguish between core competencies and peripheral activities.

In an era of intense global competition, businesses are now focusing their energies on what they do best and divesting themselves of non-core businesses. An example of this is Canadian Pacific Railways, which maintained railway operations, a mining company, a shipping company, a hotel company and several service companies. While all of these operations carried the CP logo, their core competencies were very different and they each had separate needs.

For this reason and several others, the main units of CP were split into separate stand-alone companies that make decisions independently of each other.

The post Developing a vision for the future of your international business appeared first on Trade Ready.

Decoding ASEAN markets from Canada can be a daunting task.

I remember my first trip travelling from Vancouver, BC over the Pacific Ocean and reading a stack of “culture shock” novels to prepare myself for my new overseas selling adventure. I remember reading and thinking “My goodness, it can’t be that different from our Canadian culture,” but how accurate these novels turned out to be.

Globalization has made our world smaller and more accessible from all points, but ASEAN markets have many differences. Understanding them and recognizing the need to adapt to overseas markets is vital to gaining access and developing a successful and sustainable ASEAN business.

1. ASEAN is not a homogenous marketplace, your strategy must be market specific

Market analytics should be the driving force of your strategy to ensure that it is driven by a comprehensive understanding of market complexities. Exporting companies must scrutinize relevant social and cultural, legal, economic, political and technological data, along with customer, channel prospect and competitor data, to harvest meaningful information. The information harvested must define the best growth opportunities by economic value and likelihood of success, based on facts and logic rather than assumptions and emotions.

Strategy then becomes about choice, deciding where to compete, how to compete and most importantly, how to win. A correctly executed strategy must connect all the functional and fragmented parts of the business into a coherent and unified approach. Moreover, the strategy must accurately align business resources, capabilities and capacity with target markets, verticals and customers.

If the business decision is to enter and develop multiple ASEAN markets concurrently, then the right analytics for each market must be collected.

ASEAN markets may share the single market concept and motto of “One Vision, One Identity, One Community”, but the markets are diverse. Both value perceptions and buying behaviors differ significantly throughout the region.

As an example, Singapore and Malaysia are bordering nations but must be seen in very different social, cultural, legal, economic, political and technological contexts. Companies entering ASEAN markets need to be cognizant of these intraregional differences and distinctions, as well as how they influence perceptions and shape behaviors about exporting companies, their products and partnerships.

2. Correct product and price positioning

A multi-national corporation (MNC) which manufactures batteries in the FMCG (fast moving consumer goods) segment launched into the ASEAN market, proclaiming that “our batteries last five times longer and are only three times more expensive compared to our local competitors’- we will gain millions of new customers”.

The launch failed because of misaligned product and price positioning. The company misinterpreted value perceptions, and failed to recognize that being three times more expensive was beyond the threshold of customer affordability.

Analyzing, understanding and targeting addressable market segments and customer categories is crucial to product and price positioning. Most ASEAN markets have three-tier customer categories:

1. Premium buyers – Discerning buyers who accept only top-tier brands, offering the highest quality in products with the most features, along with priority services. They are willing to pay the highest level price premium, for example Emirates Airlines first class travel.
2. Value-added buyers – Buyers who expect high quality products and services that meet specific needs. They normally accept products with less features and are willing to pay a price premium based on relevant perceived value, for example business class or economy-plus air travel.
3. Price buyers – Buyers who seek products that are of adequate quality at the best possible price, and have less concern about quality, service levels and consistency, for example economy-class or budget airlines no frills travel.

The best growth and profit opportunity may be to offer existing products or customize and differentiate products or services in the value-added buyer category. Customers in the price-buyer category are burrowing up because of globalization and better choices being made available. Conversely, customers in the premium-buyer category are beginning to seek alternatives that still meet overall needs but offer less features at a lower price-point.

Companies entering ASEAN markets must align features that matter with customers that matter. With respect to price positioning, is it about profit percentage or contributing profit dollars? This is a subjective question and depends on the exporting company’s business culture, growth objectives and longer-term ambitions. As an example, is 50% profit on a $2M business more appealing than 41% profit on a $5M business?

Exporting is normally a first step, to test the waters and begin the business building and market development process. Once a market is developed sufficiently, investment in manufacturing assets often follows. As such, companies frequently accept lower profitability during the entry and development stage with the endgame of optimizing profitability and customer service post-localized manufacturing investment.

My view? It’s about immediately being competitive and quickly gaining market-share while maximizing profitability for both company and channel partners.

I believe price premiums are achievable and sustainable in highly competitive markets. However, value-added features or services must be relevant, meaningful, and priced within the threshold of affordability.

Rather than using a simple cost-plus pricing strategy, consider a market or value-based pricing strategy. Market-based pricing factors in similar competitors, product features, services and value propositions, while value-based pricing factors in relevant product and services features that differentiate and enable price premiums.

Either pricing model must provide sufficient profitability for channel partners considering logistics and import duties. This price becomes the Ex-Works or FOB export-price or channel partner cost-price for a specific market.

3. ASEAN markets are made up of people and relationships, not just products and price

The importance and value of relationships cannot be understated or underestimated. Relationships in ASEAN markets are founded on trust and confidence. Canadian companies are considered to be highly trustworthy within the ASEAN region and this established trust equity can often translate into brand, product and services preference and price premiums.

Building trust with partners or suppliers through customer-centric business conduct and ethical behavior is something that must be experienced and this takes time. Exporting companies must understand the ASEAN culture is to establish intimate affinitive relationships that build the business. Companies that try to take shortcuts and build their businesses on opportunistic sales before establishing relationships often fail to develop a strong, profitable and sustainable ASEAN business.

ASEAN markets offer significant growth opportunities, and with the right strategy that is correctly aligned with markets, channels and customers, Canadian companies can thrive in the ASEAN region. The core ASEAN markets – Philippines, Vietnam, Thailand, Malaysia, Indonesia and Singapore – are rapidly emerging as the global growth engine of the next decade. Emerging markets and globalization is here to stay.

A number of key ASEAN markets, such as Vietnam and the Philippines, are rapidly evolving as lower-cost manufacturing alternatives to China. These evolving markets offer significant new interregional customer opportunities due to rising incomes and urbanization. The ASEAN region’s total population is approximately 45.7% of China’s, but when comparing the top 10 cities of the ASEAN region and China, that number rises to approximately 62.1% of that of China.

Vietnam reported record FDI for 2015 and the country’s General Statistics Office reports 95% year over year (YOY) growth in the first half (H1) of 2016 ($3.839b to $7.5b). By comparison, this is second-place in the ASEAN region to the Philippines in attracting FDI, who reported 103% YOY growth in H1 2016 ($19.76b to $40.15b).

The post Three key considerations to help build your ASEAN entry and growth strategy appeared first on Trade Ready.

For a company to develop the most effective plan for marketing a product internationally, it must understand the needs, desires and income of its potential customers.

It must also have full knowledge of distribution systems, delivery times, pricing and the most effective methods of promotion in the intended market.

These factors will often be very different than a company is accustomed to in their domestic market. The good news is, the differences can be discerned through thorough international trade research.

In fact, the information provided by international trade research is needed at all stages of the marketing process.

Situation analysis
Companies can use the information provided by international trade research to develop a thorough understanding of a market and identify possible opportunities.

Marketing strategy
International trade research will provide information needed to position a product to a selected target market and will also help marketing teams identify the value propositions that are likely to be successful.

Marketing mix
International trade research will provide valuable information to guide product design for a target market and indicate the price range that it will be appropriate to demand.

Implementation and control
International trade research will enable companies to monitor the effects of a marketing strategy and identify changes in the market that will require marketing or product adjustments.

A great example of the successful implementation of the marketing processes above is Proctor and Gamble’s foray into the Japanese market with one of their products.

Proctor and Gamble use international trade research to adapt their product

Proctor and Gamble’s research into the Japanese marketplace identified a possible opportunity for disposable diapers. Customer research showed that Japanese mothers tended to change diapers more often than mothers in the U.S. and other Western countries.

Based on this information, Proctor and Gamble prepared a marketing and strategic plan to sell disposable diapers to the Japanese market. The company calculated that they could export diapers to the market at a competitive price.

Market research indicated that quality was an important purchasing factor, so the exported diapers were high quality, while being reasonably priced compared to competing brands.

Despite these measures, sales of the diapers were sluggish. To find out why, the company carried out more intensive market research. This research identified that one purchasing factor was the limited storage space in Japanese homes as compared to homes in North America.

This insight enabled the company to adapt their product to meet the customers’ needs. They designed a more compact version of a disposable diaper and renewed their promotional strategy. Sales rose sharply.

As well as identifying opportunities, international trade research might indicate that a planned course of action is not wise.

Research might indicate that an international marketplace is saturated with the type of product a company plans to offer. This can prompt the company to adjust the product or service offering or target another location.

Research can also identify warning signs of financial and political instability that might result in future losses because of regime change, currency devaluation or even war.

Pinpoint potential problems ahead of time

Even when a market seems like an attractive possibility for international trade, companies must consider the many challenges and potential problems involved. Many of these might be unknown until international trade research is conducted.

For example, many countries impose tariffs, a form of tax, on imports from countries with which they do not have specific trade agreements. Such tariffs are much higher for manufactured products than they are for commodities. These charges will obviously add to the costs for the importer.

Companies might also decide to export goods without realizing that there are strict legislative or product safety guidelines, required inspections or approval processes for shipping goods in the importing country.

Without proper research, companies might find themselves overpaying duties, paying fines for overlooking compliance issues or encountering costs caused by shipping delays.

There are numerous examples of mistakes resulting from companies developing strategic plans without devoting the time to carrying out proper research into the legalities, customs, cultures or infrastructure of a new international market.

Even the most obvious information can be overlooked, causing embarrassing mistakes

In 2004, a child-labour activist from Hyderabad, India, filed a public-interest action against PepsiCo India for glorifying child labour in a television advertisement. The advertisement showed the Indian cricket team celebrating a winning game while being served Pepsi by a young boy.

This case was embarrassing for PepsiCo and might have been avoided if researchers working on the promotional strategy had identified how Indian consumers were likely to react to this idea.

Microsoft also blundered in the Indian market. When colouring in a map of India for its Windows operating system, the software giant used a different shade of green for the eight pixels representing the disputed Kashmiri territory.

The colour difference meant Kashmir was shown as non-Indian on the map. This led to the software being banned in India almost immediately after release. Microsoft had to recall all 200,000 copies and lost millions of dollars.

The result of not performing international trade research properly can range from poor sales and lost profits to damage to a company’s reputation, legal action, fines and imprisonment.

Companies that conduct diligent research, and are agile enough to adapt their products to meet the needs of their new target market have a much better chance for success.

Have you used insights gained through extensive market research to adapt a product or service that was lagging in a new market? Is there anything truly surprising that you discovered through international trade research?

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