Maximizing International Success: The Critical Role of Trade-Promotion Groups
last updated: October 31, 2023
Trade-promotion agencies can significantly enhance the services they provide exporters expanding abroad by emphasizing the mission-critical importance of pinpointing demand in international markets.
Trade-promotion agencies are vital catalysts for international business development, connecting exporters from countries like the US and Canada with customers in international markets. Often offering an array of services—including market intelligence, trade missions, business matchmaking, regulatory assistance, and more—these agencies help exporters navigate the complexities of global trade.
Yet, these aforementioned services can often overlook the economic fundamentals required for successful foreign expansions by exporters. Of these, the most critical is the ability to optimize demand for their product in international markets.
You’re Not at Home
Exporters are typically well-equipped at positioning their offering at home, thanks to the efforts of their leadership teams to establish and grow their operation in their home market. However, establishing a presence abroad is a different challenge, requiring an often unfamiliar process of value proposition localization, positioning, and use-case development in new markets with distinct cultures, customers, and non-buyer stakeholders.
For example, a business-to-business SaaS company will need to demonstrate how its product solves a high-priority, concrete problem with superior ease to win a new client. In practice, such problems are rarely identical between markets. And assuming that strong use cases in the company’s home market are the same in the international market is a recipe for failure.
Furthermore, in less developed markets with lower GDP per capita, companies are typically less proactive in their purchasing decisions. An argument that demonstrates a superior ROI is generally too abstract. On the other hand, solving a problem that people are currently losing their jobs over—even if it’s not the most attractive use case for the exporter—is the type of acute buyer pain that gets negotiations across the finish line.
Trade promotion groups can educate would-be exporters on this crucial fact and develop referral relationships with trusted partners who assist in developing successful positioning strategies.
Look Before You Leap
A common pitfall by exporters is to move too fast. They decide to enter a new market and, in a wave of enthusiasm, hire local professional services providers to facilitate market entry. Most of these service providers, however, can only perform administrative tasks related to legal and regulatory compliance. And creative service providers like marketing agencies are seldom able to localize an international product effectively. They can be great at building a website or running advertising campaigns (with no performance guarantees.) But they typically have no incentive to slow down, demonstrate the viability of a market niche, and build a sustainable business.
As a result, exporters often face tepid responses from customers in international markets. And unsuccessful international-market launches can lead to internal blame, second guessing, and insufficient senior-level attention and resource allocation necessary to build a healthy operation.
For example, a consumer electronics exporter would be well-advised to send lots of samples to their target market to test end-user response. That testing should be guided by a team comprising both employees of the exporter and local distributors or market-research consultants. Seldom will either the exporter or their international counterpart be able to nail the local use case independently. An iterative, team-based approach that exploits the synergies of these different stakeholders has a much greater chance for success.
Trade promotion groups can emphasize a nail-it-then-scale-it approach to their exporters, meaning that exporters actively participate in finding success in a new market at a micro level before formally launching or attempting to scale their operation.
Efficiency is Key
An international business operation should be scaled based on demand. It should have the capacity to transform sales prospects into happy, profitable customers. In other words, customers should be satisfied and pay enough for the company’s offering that it generates an acceptable profit.
Building a business operation that grows to meet demand without creating excess operating capacity requires both planning and discipline. While upfront investments that support, for example, a three-year plan are inevitable, many can be postponed or avoided altogether. While this approach may be at odds with the wishlists of international managers, they provide invaluable agility as an organization learns to succeed in a new country.
Trade promotion groups can promote agile operating philosophies based on Scrum or the Theory of Constraints to help exporters build more efficient operations, avoid waste, and encourage long-term success.
Here’s to Financial Health
A demand-first approach coupled with the development of an agile business operation lays the groundwork for extraordinary financial performance for exporters. Localized value propositions based on the strongest use cases maximize prices while minimizing sales & marketing costs. Lean operations and prudent investments minimize fixed costs. As a result, this approach optimizes unit economics for the international operating unit.
Furthermore, focusing on demand before building a lean operation around it leads to better financial health and economic contribution for companies participating in export promotion programs. This strategy bolsters success, enhances employment opportunities, and generates more tax revenue. It strengthens the home country’s ability to develop technology and services that benefit both the home and overseas economies.
For example, a SaaS company will spend less money to acquire enterprise accounts, increasing its margins, contributing to sustainable job creation, and indirectly promoting its home country.
And then there is the promotional element. The potential for consumer-electronics companies, for example, to make a positive impact in the international perception of their home country cannot be overstated. Consumers in places like Latin America form strong opinions of other countries based on the products they consume from those countries. And these opinions influence future consumption, travel, and career decisions. They also influence the perception voters in international markets have about the world around them, potentially desensitizing them, for example, to protectionist political rhetoric.
Trade promotion groups can further balance their traditional emphasis on market entry with the financial benefits of healthy long-term international operations.
Key Takeaways
In conclusion, trade-promotion groups have the power to grow beyond a traditional approach to product and service exportation from the US and Canada to international regions. They can partner with experts who provide the strategic guidance that exporters need to be successful in each country they enter. And through such collaborations they can deliver valuable educational content to their exporters at events and through training programs.
Such activities will also stimulate professional growth among trade-promotion staff, enhancing how exporters view them as strategic resources who provide the guidance necessary to make effective business decisions.
Overall, the benefits to demand-driven approach to international trade advances the mission and success of the trade-promotion group. Successful businesses pay more taxes, support their currency, create jobs, drive GDP, improve international relations, and protect against geo-political adversaries. And, to think, these benefits boil down to intelligent micro-level business practices and public-private collaboration.