Logic Tree diagram

Epic Returns: Nailing Demand Unleashes the Potential of International Markets

last updated: November 2, 2023

The principle of “nail it, then scale it” holds true when considering expansion into international markets. A common misstep for U.S. companies seeking international growth is the assumption that the blueprint that led to their domestic success can be replicated verbatim overseas.

It’s a grave error to believe that all it takes to thrive in international markets is establishing a legal entity, hiring a sales team, and replicating the marketing strategies that worked in the U.S. A one-size-fits-all approach tends to overlook a crucial aspect: identifying the local use case. This isn’t about modifying the product or altering the value proposition—though some level of localization might be necessary. What is critical is understanding the unique problems that your product can solve in these foreign markets. International markets inevitably face different challenges compared to your home turf, and these variations should inform your strategy.

The importance of demand identification prior to building operations cannot be overstated for the following reasons:

1. Maximized Return on Investment: As the leader of a multinational company, prudent capital allocation is a must. Simply pouring money into a foreign market and expecting success isn’t a viable strategy. By identifying demand first and gradually building your operation around it, you pave the way for scalability and maximize your return on investment.

2. Mitigated Market Risks: Numerous companies have ventured into foreign markets only to flounder. Examples abound from Walmart’s departure from Brazil to Ford’s more recent exodus in that country. Establishing demand provides the propulsive force for all operational activities, ultimately resulting in satisfied, profitable customers.

3. Strategic Hiring: A challenge faced by companies expanding internationally is building the right team. Often, this issue stems from duplicating organizational structures from other markets without considering the unique needs of the new market. Recognizing the demand can guide hiring decisions, from the balance of technical versus sales skills to the leadership style of the general manager.

4. Focused Approach to Use Cases: Collaborating with salespeople, engineers, and distributors allows you to generate multiple use cases. Each stakeholder will have different perspectives on customer preferences. The most promising ideas should be subjected to in-the-wild value-proposition tests, helping you differentiate winners from losers—an impossible task without real-world market interaction.

5. Blueprint for Future Expansions: Success in one international market can serve as a framework for expansions into other international markets. The lessons learned and the demand generation strategies used could potentially enhance the performance of your operations in other markets.

International expansions aren’t for the faint hearted, but they’re not as complex as they may seem. For all markets, basic economic principles apply. The key is to prioritize identifying the demand before scaling operations. Attempting the reverse—building an operation without understanding the local demand—sets the stage for failure. However, if you nail the demand side of the equation and assemble the right team, your regional operation will generate satisfied, profitable customers, establishing the country or region in question as an exemplar for your company’s other international efforts.