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Developing Foreign Markets One Step at A Time

By Jean-Paul David

In 1898, the advertising consultant Elias St. Elmo Lewis revolutionized sales models with the AIDA sales tool (Awareness, Interest, Desire and Action). According to Lewis, the salesperson who wants to significantly improve their performance should cultivate each phase of the client’s purchase cycle. Before purchasing a product¹, the client must first become aware of its existence - only then can an interest for it be manifested. Likewise, this interest is a pre-condition for passing to the next phase: the desire to acquire the product. Lastly, desire must be present for the act of buying to occur.

This cycle, which may seem at first to be self-regulating, in reality, has the merit of guiding the salesperson in the execution of various actions along each phase of the cycle so that they may diligently accompany the client toward the act of buying. Since the development of this model more than a century ago, numerous variations have been advanced, some adding new phases, others either taking the form of a pipeline or of a funnel.

At any rate, it is when an enterprise exports or that it seeks to develop business in distant markets that the adherence to these phases becomes most important. How many times have I been witness to an exporter who took great pains, in vain, to promote their products abroad by proclaiming: “We are the standard!” How is it possible to make such an affirmation without being the object of any preference within the intended market? Several phases of the cycle have necessarily been sidestepped... especially the first: the awareness of the enterprise and/or its product.

Essentially, developing a foreign market is comparable to launching a new business. When doing business internationally, one realizes how quickly enterprise or product awareness can vanish, on top of the fact that the business environment to which one became accustomed is suddenly transformed or unrecognizable. Similar to a start-up, international business development requires an investment in time and money. In my opinion, in order to make the internationalization project profitable, the exporter must aim to become more than just the ‘standard’ or the preferred supplier, she must plan for recurring business, a sustained flow of purchases from international clients.

An adapted version of Lewis’ model, developed by Mercadex for international sales, arms enterprises with a new tool for growing recurring export sales: The International Business Development Hierarchy. Inspired by Lewis’ original model and by many other subsequent versions², Mercadex’s Hierarchy addresses itself to strategy professionals, marketing specialists and business development executives who wish to raise their performance internationally.  Mercadex’s Hierarchy is illustrated by a series of 5 levels to attain (as opposed to a funnel). Each of the levels represents an expected action on the part of the foreign client (importer). To elicit these reactions, a series of conditions must be fulfilled and various actions must be undertaken by the exporter, as shown in the following table.

Make yourself noticed: 1st level

You may very well propose the best product in the world, or even have an iron-clad sales pitch, but if no one has the opportunity to see you or hear your message, it’s as if your cries are muted within a vast desert. The first level of international sales is becoming visible, seen and noticed by the foreign target clientele. The exporter’s challenge is to choose, according to the different foreign markets, the most relevant and high-performing channels. The Internet is without doubt an irresistible medium, being relatively inexpensive for the enterprise and easily accessible for users… at least for certain users. Within one of the world’s most prized markets, the Great Firewall of China (law on Internet censorship) limits the reach of your website, even if it is translated in Chinese. As for other emerging markets, sometimes nothing compares to interpersonal communication and human networks to diffuse the message and get noticed. Be that as it may, at the first level, one must attract attention, be seen and noticed. So and only so will you have the chance to be considered as a foreign supplier.

Get yourself looked at: 2nd level

Great! You’ve been noticed. You are now known within the intended market, along with several other competitors. The challenge is now to get yourself looked at (considered) as a credible supplier. To do this, you will need to know the base criteria for your target clientele abroad: their non-negotiable conditions. Are there any criteria that are necessary yet not sufficient for these foreign clients? For example, products and services destined for the public sector have specific criteria. Among them, one often finds the requirement to maintain a place of business within the host country and the capacity to be able to communicate in the language of the foreign client. Satisfying these requirements will only place you on equal footing within a restricted group of other suppliers. Instead of only being seen, this time you will be considered as a potential exporter. You will now appear on the short list of qualified suppliers.

Get yourself chosen: 3rd level
After having been noticed and looked at (by your foreign client), it is now time to stand out (from your rivals). Beyond base criteria, that by the way are often binary (e.g.: “being this or that”, “having this or that”), you must now reveal the unique nature of your business proposition - its appealing and distinctive attributes. The importer will now be less binary in their selection process, and more calculating and discretionary. They’ll evaluate your proposal by looking at several other factors of varying importance. They’ll try to find points of reference and benchmarks to compare your proposal and in order to inform and strengthen their decision. The first question that must cross your mind is “who are my competitors?”, as they must be known before you can distinguish yourselvesfrom them. And knowing them means more than just being able to name them. Further, the other suppliers with which you’re competing are not necessarily confined to the host country. Like you, they may hail from far and wide.

Sometimes, a successful differentiation strategy involves changing the rules of the game. An OEM that Mercadex had accompanied in the development of the US market was faced with clients using an evaluation method that put them at a disadvantage: the payback period. The competition’s average payback period stood at around 30 months for a particular piece of equipment, whereas Mercadex’s client’s stood at around 37 months. The discrepancy was explained in part by their machine’s greater durability. This client was then advised to propose a new point of comparison to the contracting party: the equipment’s useful life expectancy (which in the case of Mercadex’s client, surpassed the competition’s by about 3 years). Adding this aspect to their message had the effect of significantly raising their RFP success rate, sending their competitors back to the drawing board.

Your ability and willingness to adapt your product to the local reality can also be favourably seen by the foreign client. When dealing abroad, the exporting enterprise will sooner or later face the standardization- adaptation dilemma (concerning the product, its promotion, its pricing etc.). The enterprise, for efficiency’s sake, is better off standardizing everything; however, it must also remain flexible for its market incursion to be successful. On this level, to woo one’s foreign client, adaptation must often move beyond conformity, it must aim for differentiation.

Getting the client to buy: 4th level

Your bid was retained. You were preferred among a number of handpicked suppliers. So why is your new client taking so long to pass their order? Why aren’t they buying? According to Mercadex’s Hierarchy, all that you have sold them so far is the idea to purchase you product, service or solution.

To illustrate, I would like to share with you a recent experience in which my firm won an important call for tenders for a foreign client in the semipublic sector. Shortly after our bid was retained, our enthusiasm was put on hold when we learned that the client still needed to ask for and obtain financing from the state in order to carry out the project.

While several factors remain outside of the exporter’s control, some measures can be taken so as to convince the client to settle his purchase promptly. Here are some actions that can be considered:

º Proposing new credit terms or financing
º Transacting in the local currency
º Proposing new Incoterms
º Securing one’s website (in the case of internet sales);
º Offering different methods of payment (online, SWIFT, letters of credit, credit card)
º Eliminating any pain-points within the ordering process
º Adding a validity date to the proposal
º Etc.

Getting the client to repeat: 5th level

Repeat sales bear testimony to the success of the sales effort and of the business relationships maintained with the clientele. Repeat business from international accounts, by the same token, is the ultimate foundation for the enterprise’s sustained growth.

At the first levels of Mercadex’s Hierarchy, the client compares you to your rivals, whereas at this fifth and last level, he will consider his experience as a client in light of his original objectives and expectations.

But in terms of the exporter, the goal of this fifth level goes well beyond repeat purchases from its clients. The enterprise must develop sales that are increasing in volume and frequency, as well as obtain referrals to new clients. Specific and targeted business development actions must be planned to attain these objectives, as illustrated in the Hierarchy table.

Are you familiar with tripadvisor.com, the web portal which posts traveller comments and evaluations? Don’t forget that today, consumers no longer need to be invited to share their opinions online. What is the “TripAdvisor” of your sector of activity or of your target market abroad? Do you know if your enterprise is the subject of online discussions? Maybe you can find hidden assets as was the case for one of our clients, Campagna Motors, who discovered a fan club on certain social networking sites. You could benefit from a stronger and more favourable reputation by involving some of your satisfied clients (fans). (http://www.campagnamotors.com)

In the case of indirect export through intermediaries (distributors, agents, VARs etc.), breeding customer loyalty also involves retaining, satisfying and mobilizing the key players of the distribution network. This highlights the issue of the level of control that the exporter entrusts to the members of the promotional and distribution channels within the host markets.

Toward sustained growth

Finally, it’s not incumbent upon the sales / export department to attain these 5 levels on its own. Several enterprise functions are called upon to participate in the international business development effort in order to sustain the enterprise’s profitable growth. Among the functions most likely to be solicited are

º Marketing
º Sales / Export
º Finance
º Webmaster
º Customer Service
º R&D / Engineering
º Public Relations
º Etc.

For more information on the different actions to implement in order to ascend Mercadex’s International Business Development Hierarchy, please contact the author.

¹ The notion of a product equally encompasses services.
² For example, Sheldon’s model which adds a fifth phase : “satisfaction”, which leads to repeat sales.

Jean-Paul David, President,
Mercadex International
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