Download How to Build a Successful B2C International Business

How to Build a Successful B2C International Business
Agenda
• Introduction - Consumer and Foodservice Categories
• Keys to a Successful B2C International Business
Macro Situation
There has been unprecedented growth in the world economy. Markets
like China, Mexico, India, Brazil and Indonesia are rapidly expanding
and fueling much of this growth.
• This growth is no longer being fueled
exclusively by exports or high commodity
prices, but by internal consumption.
• Disposable income and consumer
spending are growing.
• International consumer and retail sectors
are growing. Particularly the modern
supermarket trade.
• There is a higher exposure and better
access to new and innovative products.
Consumer and Foodservice
Categories
• The consumer and foodservice categories are
growing and reaching a level of sophistication unseen
until only a few years ago.
• Advances in technology, distribution systems and
communications are facilitating distribution
expansions in existing and new channels.
• Consumer behavior is rapidly changing in parallel to
continuous trends towards increases in disposable
income and improvements in standards of living.
Improvements in
Standards of Living
• It is estimated that China’s middle class is 300 million people.
This is equivalent to the entire population of the United States.
• About 25% of the country’s population, or about 50% of its
urban population, is considered Middle Class.
• In the past decade, the middle class in Latin America grew
50%. This now represents 30% of the population.
• This growth is due to economic growth and job creation.
• To maintain these gains, there is a pressing need to enact
policy reforms within the labor, tax and social security sectors.
Source: World Bank
•People are shopping, traveling
and eating out a lot more.
•Retail and foodservice channels
are booming.
•There are a lot more consumers
and they are demanding a lot
more products and services.
The Key to Build a Successful
International Business is to
Think Beyond Export!
Discard the idea of
Export
which means just to send goods
to a foreign country or overseas
territory.
And embrace the concept of
Business Development
which includes the set of tasks and
processes aimed at developing
and implementing growth
opportunities.
1. Think Beyond ExportExport vs.
International Business Development
Export
Tasks &
Processes
International
Business
Development
Strategy
Shipments /
Sales
Opportunistic
Strategic
Planning
Sustainable
2. Conduct
a Company Assessment
and a Business Analysis
• The assessment and analysis of the company and the
business helps zero-in on the vision and the key priorities to
draw the initial directional statements.
A.Determine the company's readiness and commitment to
expand internationally.
B.Evaluate the product's international potential.
C.Conduct a general competitive analysis and find the
industry's global trends and growth potential. Conduct a
general competitive analysis.
2.1. Make the Commitment
• International business takes time, effort,
resources, and returns are not always
immediate.
• International business needs a strong
commitment to be successful.
• Commitment from management is needed, but it is not
enough. Commitment is required from all members in the
organization: Manufacturing, logistics, finance, customer
service and domestic sales.
2.2. Readiness
You will have to assess your company's
strengths and weaknesses in detail:
• International expertise
• Human resources
• Production resources
• Capacity
• Ability and flexibility to adapt products
• Domestic market success
• Financial and capital resources
3. Develop and Follow a
Proper Business Plan
It is important to have a structured and carefully
researched plan in place.
•Develop an international plan.
•Incorporate it into the company's overall plan.
•Develop a plan for each individual market or region.
4. Thoroughly Research
The Markets
• Do not rely exclusively on secondary sources of information, like
economic indicators, statistical data, internet research or generic
market research.
• Do primary and in-market research:
• Interview prospective partners
• Talk to consumers
• Travel to the markets
•Visit different channels of
distribution
•Check your category
•Check other brands and
categories managed by the
distributor or prospective
distributor.
• Do store checks
• Take notes and collect specific and detailed information.
•Learn and know as much as
possible about every international
market you intend to enter.
•Learn about the channels of
distribution, the category, the
competitors, their products and
their prices.
•Learn about your prospective
partners, their reputation, and their
strengths and weaknesses.
5. Define and Prioritize
Target Markets
• Identify market types:
• Strategic, Primary, Secondary and Opportunistic.
Market Selection
Type
Profile
Investment
Approach
Examples
Strategic
Large pop (>50mm)
High GDP
Developed Categories
Developed Trade
Global Retailers present
Significant level of
investment
Brand and promo support
Market research
High involvement
Local office (or sales rep)
Or local distributor
Direct for PL
Mexico
Brazil
China
Primary
Mid size pop (>10mm)
High GDP
Developed Categories
Developed Trade
Global Retailers present
Moderate investment
Brand and promo support
Mid level of involvement
Local distributor (w or w/o
regional sales rep)
Direct for Walmart
Saudi Arabia
South Africa
Argentina
Taiwan / Korea
UAE
Secondary
Smaller pop (<10mm)
Low GDP
Low complexity
Minimal investment
No direct brand support
Local distributor (w or w/o
regional sales rep)
US exporters
Direct for Walmart
Caribbean
Central America
Other ME
Other Asia
Africa
Opportunistic
Profitable opportunities
Non-proactive approach
Low complexity
5. Define and Prioritize
Target Markets
• Assign priorities to markets, countries and clusters through a Tier system.
• Prioritize based on market type (Strategic, Primary, Secondary and Opportunistic). But
also based on:
• Trade development
• Barriers of entry
• Resources needed to launch and maintain the business
• And other category related variables (competition, category development).
• Build launch plans and schedules based on the Tier system.
• Identify and assemble market clusters based on geographic, cultural, language and demographic
similarities to build synergies, efficiencies and critical mass.
6. Find the Right Partner
• Finding the right business partner in each country is the number
one rule for success. Be sure to check your potential
distributor's:
• Size
• Financial situation
• Influence and reputation
• Access to the trade
• Experience in your category
• Brand portfolio
7. Develop a Clear and
Specific International Strategy
•The basic four “P’s” of marketing
(product, price, promotion and
place) perfectly apply to
international business.
•But international marketing is not
the same as domestic marketing.
It is important to acknowledge and
understand and address these
differences:
Differences
• Lower Disposable Incomes
• Cultural Differences
• Different Tastes and Needs and Wants
• Long Supply Chains
• Complicated Pricing Models
• Different Channels of Distribution
8. Distribution Channels
• The trade in most international markets is
'modernizing':
• Both, international chains like Walmart and
Carrefour, and local chains like Soriana in Mexico
and Panda in Saudi Arabia, continue to expand.
• The traditional channels of distribution, in the form
of wholesalers, mom-&-pop stores or food carts, are
still very prevalent in Latin America, the Middle East
and Asia.
• Alternative retail formats are growing and expanding
their product offerings to include grocery and other
consumer products.
• Convenience Stores like Oxxo or Mi Bodega in
Mexico and LatinAmerica.
• 'Pharmacy' Chains like Farmacias El Fenix and
Farmacias Guadalajara throughout Latin America.
9. Export Pricing
• Identify the most appropriate pricing mechanism for the company's
international business.
• It is important to build the pricing structure following a reverse pricing
methodology. Define a target shelf retail price, and then incorporate
all of the value chain variables from the bottom up.
• Retail Margin
• Wholesale Margin
• Commercial Conditions (listing fees, promos)
• Distributor Margin
• Landing Costs
• Freight Costs
Barriers and Challenges
To International Success
• Lack of commitment
• Underestimate the competitive environment
• Underinvestment
• Lack of local marketing knowledge
• Miscalculate pricing
• International sales under domestic umbrella International becomes a nuisance and a distraction
Thank You!