The American Marketing Association’s flagship publication, Marketing News, recently ran an article entitled ‘Look Farther Afield, which described how research should answer certain questions for marketers hoping to expand into new markets. This feature was contributed by B2B International’s very own Julia Cupman. Julia’s full original article is serialized over our next 3 blog entries:
The recent economic turmoil involving long established financial pillars has had a resounding impact on business. Many companies have experienced declining sales and confidence in the economy is dwindling. Numerous economists are claiming that it is the worst financial crisis since the Great Depression, but while the seriousness and consequences of the problem cannot be denied, it is only an economic stymie if businesses allow themselves to lose confidence and focus.
The fear invoked by the Wall Street tremors has led to a fierce slashing of budgets, in particular marketing budgets. Why are marketers feeling the pinch with decreased spending power when it is such a crucial time to understand customers’ requirements and meet their needs before they potentially defect? Indeed, just a 5% reduction in the rate of customer churn can increase profits by as much as 85%.
Given that most businesses lose around half of their customers every five years, it is frightening to think how many customers have been lost in the past few months alone as a result of the faltering economy. The case is already clear: do nothing, and suffer.
The drive towards lower costs and consequently lower prices is increasingly resulting in the substitution of value with low price – an area where not everyone can compete as profit margins are squeezed dry. In fact, a company that seeks refuge in cutting its prices may fatally delineate its own downfall as it could devalue its offering and denigrate its brand. It is thus paramount that in times of a weak economy, businesses seek proactive means of remaining competitive, and cutting prices may not be the answer. This begs the question as to what companies – especially their marketers – can do to give their business a welcome lift in times when the only direction appears to be downward.
This may seem absurd when it is challenging to simply retain customers and to ensure that turnover and profits do not slip. So how can selling more be possible, and in what way is it a panacea?
It is necessary to think outside the box. With sell more, think sell elsewhere, think sell farther afield, think new opportunities. Of course entering new markets is not appropriate for all companies, but it is an option that many companies could consider, particularly if they are faced with stagnating demand domestically.
Thus, if growth is not occurring locally, chase it internationally. The growth forecast for China next year, for example, stands at 9.5%, contrary to 1.8% for the EU. Indeed the BRIC countries (Brazil, Russia, India and China) offer a plethora of opportunities as labor is often cheap and readily available, investment is increasing and the prospects look good. Consider Russia and the helicopter industry, for instance. AgustaWestland is currently researching the opportunities in Russia, and Textron Bell has just signed up a new sales representative (Jet Transfer) in Russia which has committed to sales valued at over US$10 million. These two players have recognized an unmet need and a clear opportunity, as only half of Russia’s civil helicopters are in flyable condition and domestic production is limited.
This article, which goes on to describe many of the questions that marketers should ask in order to explore, scope and define market expansion opportunities, continues tomorrow.