When a company expands into international markets, it must adapt to many new circumstances. Employee relations, local regulations, and cultural factors are some of the difficulties to consider when growing globally and planning for success.
When a firm goes global, it must address the many differences in operations, marketing, and infrastructure between its home country and the new one. It must also understand how these distinctions might influence international growth methods.
Why Should Companies Expand?
Companies expand to increase profits and revenue. Expanding into foreign markets allows firms to access millions of new customers and increase sales while keeping existing customers happy.
By entering new markets, companies can also benefit from economies of scale since they can use their existing supply chain infrastructure.
Read our blog about reasons to expand Into the European medical device market here.
What Strategies Do Companies Use?
Companies use various strategies for international expansion. The most common ones include geographical, product, and market-based approaches, which can be used in combination with one another.
Geographical
The most important component of this strategy is the placement of new facilities in geographically advantageous locations for the firm’s target customers.
Pros:
- Allows companies to significantly expand their customer base by selling their goods and services in fresh markets.
- Companies can keep expansion costs low if the new facilities are near where raw materials are produced or a wholesaler where labor expenses can be limited.
Cons:
- Geographical strategies are often challenging to implement because they require significant investments and resources dedicated to infrastructure.
- Companies may be unable to find a suitable location or face difficulties adapting their operations to an entirely different environment.
Product-based
Developing new products or services aimed at consumers in overseas markets is the primary focus of product-based strategies.
Technology and consumer goods are two industries that often use product-based tactics for expansion. For example, companies manufacture brand new products explicitly designed for overseas markets or alter existing products that fit target customers’ tastes in the new market.
Pros:
- Consumer goods are often easy to export, store, and ship because they are non-perishable items.
- Companies can superficially modify products for foreign markets by simply altering the packaging or changing the language on the label.
Cons:
- Product-based strategies may not be successful if consumers in the target market prefer locally made items over imported ones.
- Companies may not produce enough goods in time to benefit from the overseas market’s peak season.
- Product-based strategies can be quite expensive because they require a significant investment in research, design, and manufacturing of brand new goods.
Market-based
Market-based strategies involve expanding into new countries where there is a demand for the goods and services offered by the company. Technology and consumer products sectors are two examples of industries that often deploy market-based tactics.
Companies may choose to create brand-new offers produced expressly for overseas markets or current products updated to suit the preferences of the new buyers.
Pros:
- Marketing and distribution costs are usually lower.
- Companies may already have the needed infrastructure to sell products in the new target market.
Cons:
- Products may not be as well suited for overseas use as locally made items.
A Shining Example of International Success
An example of one of our clients a US based leading manufacturer of healthcare apparel we helped expand quadruple it sales and Increase distributors from 12 to 55. A premium product for good price was not only the key to success.
- Management was Involved and committed to International growth. Willing to Invest, adapt and spend time on International growth activities;
- Localized in-continent sales team deployed by GrowthMedics speaking multiple languages with quick ramp up time with access to Industry;
- Supporting team development and willingness to Invest In Involvement and training;
- Listening to customers and even though complex, willing to adapt the manufacturing process to customers needs and Invest In local stock;
- Investing In digitization, marketing tools, online ordering and marketing platform for distributors to facilitate sales;
- Strong customer service and account management, outcompeting competitors with service.
A Failing Example of International Success
Size does not always matter. Best Buy failed to succeed In the UK and Asian market. Walmart failed to succeed In the German market. Main reasons were not listening to cultural and product needs. Large retailer chains outside of the city were not received well by Germans.
Also offering products to local needs and localizing marketing strategies are key to become successful In International markets, which were both not executed successfully by both retail chains.
Choosing The Appropriate Expansion Strategies
Companies must closely consider their target customers in their new market to establish a long-term competitive advantage. Examining and catering to customer preferences are crucial elements of a successful international expansion. Effective marketing requires understanding the customer journey, including the brand experience, product display and messaging, and sales efforts.
With thorough research, planning, and targeting, successful market penetration and capturing an international audience will be within reach.
Let’s discuss your expansion possibilities
With our years of expertise In assisting medical companies expand Internationally, we recognize the challenges companies face and can advice on the steps to take to reduce risks, liabilities and cost while Increasing success rates.
Get In touch with us for a consultation, email us at contact@growthmedics.com.
