Expanding internationally is rarely easy and is often approached on a rather opportunistic basis. Having a good understanding of the options will help you contribute to your organisation’s strategy and identify the critical areas where marketing can make the difference between success and failure. What are your Route to Market (RTM) options?
Routes to market
There are four main ways to sell your product or service internationally:
- Sell through partners
- Selling direct
- Contractual methods such as licensing or franchising
- Setting up an overseas operation
To determine what is the best route for your business, be prepared to research and get advice on what’s already happening in your target markets. You’ll need to find out, for example, customers’ buying preferences and whether your product or service will require local representation, such as a reseller or distributor. It’s also important to take steps to protect your intellectual property, regardless of which way you choose to export.
Some routes to market will need relatively higher levels of initial investment and more ongoing management and may not be suitable if you’re new to exporting. But if you are able to invest more effort and resource, then you’re likely to see better rewards. It might be a good idea to test a lower cost method of selling on a smaller scale before investing heavily on a specific route.
There’s no substitute for a hands-on understanding of your target market(s) but as a starting point you could see the UK DTI guidance.
For more information on exploiting your Intellectual Property internationally see the information from the UK Government’s Intellectual Property Office.
I’ll now focus on the first option: ‘Selling through partners’.
Selling through partners
There is a multitude of business to business partnerships that you can use as a route to market. These include familiar ones such as distributors, agents and resellers, as well as less common ones such as marketing alliances and joint ventures. The type of partnership must fit both your product or service and the market you are aiming to enter.
Note: the term Partnership used here is quite distinct from the UK legal use of a commercial entity, for example, a Lawyers’ partnership.
Here are some key questions you should consider before identifying the correct route:
- Is a partnership an appropriate route to market compared to alternatives such as direct selling?
- What strategic decisions should you take before seeking partners?
- What are your partners going to sell and/or support? You might need to modify your proposition to sell it through partners
- What’s the best way to attract, select and on-board partners?
- What happens after signing up a partner; what do you need to do to make it a success?
Partners may provide market access via local sales and support, but they could also provide complementary products and services, technology or other expertise to meet local standards.
Partnering can provide a more effective solution compared to direct sales if:
- You don’t have sufficient cash to make an investment in direct sales
- Recruiting your own sales organisation and gaining market knowledge will take too long – where speed is critical
- The time and resources needed to develop new markets may cause you to lack focus and lose existing business
Partnerships are not a panacea. It’s normally impossible to create sales partnerships if you don’t have prior experience of selling your product or service; and you need resources – money, time and expertise to build partnerships.
Download the complete article Globalisation – Going Global through Partners.