Business beyond borders: How to make sure your product will sell overseas
Despite COVID-19, there’s an overseas marketplace ready right now for you to sell your product — you just need to know how to do it well.
Want to sell your product overseas? While expanding internationally might feel like a pipe dream for many Australian businesses, there’s still a global marketplace ready right now despite COVID-19 — you just need to know how to do it well.
International business specialist Cynthia Dearin, founder of Dearin & Associates, provides a step-by-step, accessible guide for business owners and entrepreneurs in her new book, Business Beyond Borders: Take Your Company Global.
This extract covers a guide to how to make sure your product is market-fit for the international stage, before you take it over there.
Business Beyond Borders book cover. Source: supplied
When it comes to selling internationally, mistakes are often made around the fit between the product and market. It is easy to understand how it happens. When companies are intimately acquainted with the desires and expectations of customers at home, and have been meeting those to a high standard for a long time, they can get complacent. When the time comes to expand to new markets overseas, leaders tend to think,
“We know people buy our product and we know what works best for our clients. We’ll replicate what we’ve done at home overseas and everything will be fine.”
But this is not the case, as a bunch of companies (including large ones) have learned the hard way.
The initial failure of Starbucks in Australia is a great example. Starbucks has coffee shops all over the world. There are more than 28,000 locations and 76 markets, from Shanghai to Guantanamo Bay. But when Starbucks launched in Australia, it discovered that ‘the land down under’ was one of the toughest markets in the world to break into.
The company opened its first Australian shop in Sydney in July 2000 and expanded rapidly.
Because of its success elsewhere, Starbucks believed that it could ‘copy, paste’ its business model to Australia without customisation. Starbucks did not realise that, when it comes to coffee, Australians are spoiled for choice. They have been immersed in the nuances of cafe culture since the mid-1900s, when Italian and Greek immigrants began arriving in droves, bringing espresso coffee with them.
Cafes in Australia were born out of the Italian culture of meeting a friend and knowing your local barista. The cafe was a local meeting place where everyone knew each other and coffee was a part of that experience. By the 1980s, Australians were fully engulfed in cafe culture and had also grown accustomed to specialty menu items like a flat white or an Australian macchiato.
Starbucks introduced a very different, American-style, coffee culture which focused primarily on coffee as a product. It had a basic menu and offered a range of sugary drinks, which most Australians did not like. Starbucks also charged more than local cafes. Australians responded by opting to pay less money for coffee they liked better, from a local barista they trusted.
By 2008, there were 87 Starbucks stores across the continent. The company had accumulated losses of more than $105 million and borrowed an eye-watering $54 million from its parent in the US. Starbucks Australia announced it was shutting down 61 stores, two thirds of its Australian business.
Starbucks has since adapted its strategy and re-engaged with the Australian market. However, its story confirms that even if you have a wildly successful brand at home, it will not necessarily work overseas. This is because how customers perceive and engage with a brand differs from country to country.
There are several indicators that signal that a company has not nailed its international product-market fit. These include launching in a new market without:
If you start selling internationally without this knowledge, there’s a real risk that your sales results will not match your revenue forecasts. The solution?
Getting clear on your value proposition
The easiest way to get clear on your value proposition for a particular client in a particular segment is to create a Value Map, which describes the features of an offering in your business model, in a structured way.
Source: supplied.
A Value Map breaks a value proposition down into three parts.
Products and services
Product and services is the list of what you offer — think of it as all the products that your customer can see in your “shop window” — anything they can buy from you. This bundle of products and services helps your clients get things done or helps them satisfy basic needs.
Your value proposition could be made up of different types of products and services including:
It is important to remember that no matter how great your offering is, products and services by themselves do not create value. Value is created only in relationship to a specific customer segment and the goals, challenges and desires of the people in the segment. That is why not all products and services have the same relevance to all your customers and why some parts of your offer are essential to your value proposition, while others are merely nice to have.
Pain relievers
Pain relievers describe how your products and services address your clients’ challenges. They explicitly outline how your offering eliminates or reduces some of the things that annoy your customers before, during or after they try to accomplish a goal, or anything that prevents them from accomplishing the goal.
Great value propositions focus on challenges that matter to your customers, in particular extreme challenges. You do not need to come up with a pain reliever for every challenge that your client is facing, you just need to overcome a few extreme challenges very well.
Strong value propositions also recognise that a pain reliever can be more-or-less relevant to a client, depending on their circumstances.
For example, imagine you sell a pocket-sized portable speaker with Bluetooth capability, a 10-hour battery life and a waterproof case. The speaker itself relieves the pain of picnics and beach visits without hi-fidelity music for consumers all over the world. The waterproof case also relieves the pain of having your speaker ruined by a sudden downpour during a picnic. However, the waterproof case relieves a pain which is far more real for consumers in rainy Britain than for consumers in sunny California.
As you create your Value Map, make sure that you are clear about which pain relievers are essential for your international customers, and which ones are just nice to have. Essential pain relievers fix extreme challenges, often in a radical way and create a lot of value. Nice to have pain relievers fix less significant problems and tend to be features which the product could still operate well without.
Value creators
A Value Map also includes value creators: ways in which your products and services create value for clients by helping them attain their desires. Value creators explicitly outline how you will produce the outcomes and benefits that your client expects, desires or would be surprised by.
As with pain relievers, value creators do not need to meet all your clients’ desires. Focus on those that are most relevant to your clients and on areas where your offer can really make a difference.
Pain relievers and value creators both create value for the client in different ways. The difference is that pain relievers specifically address challenges in the client profile, while value creators specifically address clients’ goals (things that they are trying to get done by using your product).
It is fine if aspects of your product address goals and challenges at the same time. The real objective is to make it very clear that your products and services create value for your customers, in ways that they care about.
This is an edited extract from Business Beyond Borders by Cynthia Dearin.
