Time to Tackle New Markets
Entering a new export market is a big strategic decision. There is a lot of research and a degree of risk involved. But if you get the preparation phase right, there can be big rewards down the road.
Irish exporters to Britain will consider various strategies for managing changed arrangements if the UK leaves the EU. Diversifying into new markets is one option writes Eddie Goodwin Manager Germany, Switzerland and Austria at Enterprise Ireland.
The most important consideration is the market opportunity for your particular product or service. The size of the market, scale of the opportunity and the fit with your offering is the first and key consideration. At Enterprise Ireland, we can assist you in analysing this through a detailed Market Opportunity review on overseas markets.
Given their geographical proximity, Eurozone markets can be a strategic first step to diversifying beyond the UK; and it is possible, at least initially, to win deals and service customers from Ireland. In selecting a new export market— Eurozone or otherwise— it is advisable to think about the 5 Cs: Competition, Cost, Commitment, Culture and Channel to market.
Standing out from competitors will be a key. The best case scenario for any market is to have an innovation advantage: a product or service better than those in the market. Quality and service are more complex to convey but are a strong selling point; and lastly, if focusing on price competitiveness, it’s important to know this in facts and figures rather than in general terms. For example, in France a sales pitch would be expected to have a detailed presentation and start with facts and figures.
Most important is that you know where your company stands in relation to your competitors and you are clear what your advantage is.
The cost of entering or even selling in a market is an important consideration. Within this are the considerations such as cost of transport of goods, cost to serve your product/service locally and localisation costs. It’s important to factor in multiple business trips to markets with longer lead times.
Commitment and capacity requirements to markets and decision-making times vary greatly. The North American market can be very lucrative and can have quick decision-making times. However, companies often need to think about resourcing and “putting boots on the ground”, so this needs to be factored in early on.
Even within Europe, markets can differ greatly. Germany & France generally have longer lead times whereas the Benelux countries, Nordic countries and Switzerland are often early adopters of technologies out of Ireland and have quicker decision making times.
The length of time and commitment required should be factored into the diversification strategy. A further factor is the capacity within the company to manage the sales process from Ireland. Is there a natural link with an existing member of staff with language and experience to resource it? Can a number of markets be managed by one staff member e.g. neighbouring parts of France, Germany and the Benelux are sometimes served successfully by a single sales person on the ground.
The channel through which you enter a new market is a decision that will define the nature of your business there. There are two choices— sell directly or have someone sell for you. If a distributor is the relevant route, then caveat venditor is to be heeded. A handshake agreement is not recommended and local legal advice should be obtained before signing. Certain markets like the US, France and Germany— because of their size— are particularly suitable for distribution/partnerships arrangements. However, it is best to think regionally from the outset as most distributors cover certain regional areas only. Factor in the team investing time in educating and managing the relationships with partners in the market. This bears fruit in terms of end markets sales.
Lastly, business culture in the target market and its fit with your own company’s culture should not be overlooked. Look to existing staff for a starting point in relation to language capabilities. This can help immediately with market research and initial sales leads generation. Can dealing with existing customers in one business culture give you an advantage in winning customers in another?
Preparation usually goes a long way to understanding subtle cultural differences in a given market. Among these would be: language and— if people are comfortable doing business in English— seniority and decision making e.g. in France the most senior person in the room is not always the decision maker for a project; it may likely be the engineer or procurement person. In Germany, consensus decision making is the norm so count on winning over a number of people in the company. In Italy and Spain count on investing time in building the relationship before business discussions begin.
In summary, preparation is key and will help companies find the best fit in relation to their own offering and business culture. There are major opportunities for Irish companies to diversify— particularly to markets such as the Eurozone and North America. Some time spent investigating at the outset will be time well invested and Enterprise Ireland— through its 30 overseas network of offices— is available to guide and support you.