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When in Rome

“When in Rome”

Fine-tuning your products and services for international trade.

Why bother thinking globally?

You really don’t have a choice. Like it or not, you’re already playing in an international arena. Even if you’re not exporting products or services overseas, other countries are sending their wares here, which forces a competitive standoff. If someone is competing in your backyard, you better do likewise.

Growth is another compelling reason to expand your horizons. "Your opportunity for growth is much higher overseas," points out Bill Neal, co-founder and executive vice president of international sales at Poly-Flex, a Grand Prairie, Texas-based manufacturer of liners for environmental control and water-conservation facilities. Poly-Flex, which generates more than 20% of its $25 million in annual revenues through exports, is achieving annual sales growth of 20%-24% overseas, compared to 6%-10% domestically, says Neal.

Where to head first?

When evaluating markets, consider four points:

  1. Where competitors are. If a rival is having success in another country, chances are that your products or services might also do well there.
  2. Where customers are. If you’re a business-to-business company, look not just where customers are headquartered, but where they have markets. Electronics giant Siemens AG is based in Munich, for example, but some of its biggest markets are outside of Germany.
  3. Wherever there is rapid growth or size. This is one reason the United States has been a target for importers.
  4. Where industry trends are coming from. If you’re in software, you may want to look at India. If you’re in retail, look to Europe.

Be prepared to change

International trade is not a one-size-fits-all approach. It’s highly unlikely that you can take your product or service "as is" into another country. Culture, economics and government regulations will play a role in fine-tuning your product architecture.

Consider how travel-worthy your product is from a functional perspective. Does it need to be adapted in any way?

There may be government regulations that force you to comply with electrical standards, environmental controls or measurement systems. (Your product may not even be allowed in a country, or there may be stiff tariffs to protect domestic industries from foreign competitors.)

Local tastes also play a role. For example, Coca-Cola varies the sweetness of its soft-drink formula according to local markets. McDonald’s sells beer in Germany, mutton pies in Australia and vegetarian meals in India. And U.S. poultry producers trim chicken wings and legs more neatly for Japanese customers.

Reinvent yourself. Sometimes local market preferences aren’t an obstacle, but an opportunity. A product that is either outdated or doesn’t sell well domestically could be in high demand elsewhere. Case in point: Americans are partial to white chicken meat, but other countries, such as China, Japan and Russia, prefer the dark pieces. U.S. poultry producers export 40% of all dark meat abroad, where it sells more profitably, reports the National Chicken Council.

In fact, one country’s trash may be another one’s treasure. Chicken feet, though a waste product in the United States, can be sold to Asian markets, where they are used to season soup.

Wrapping it up

Product adaptations aren’t the only tweaking to be done. Global marketing also requires that you rethink packaging:

Labels. Some countries require bilingual labeling, such as Canada (French and English) and Belgium (French and Flemish). Even if language translations aren’t required by the government, it’s often smart marketing. In Morocco, for example, people speak Spanish, French and Arabic.

And though Americans are generally insensitive to British spelling, Brits are offended by American variations. That means the "color gray" is really the "colour grey" in London.

Don’t overlook graphics. A picture may be worth a 1,000 words, but it’s not always interpreted the same. An overused, but illuminating example: In Africa, where many people can’t read, pictures are used to communicate what’s inside the package. Gerber first entered the market using its traditional label with a baby on the label. The notion that jars contained babies didn’t exactly spark sales.

Containers. Environment can affect your packaging. Paperboard containers are common in the United States; however, in hot, humid countries, customers might prefer a metal box to prevent food items, such as crackers, from going stale.

Size. Americans love oversized products, but in other countries, you’ll need to scale down — sometimes because of economics or cultural preferences. In Japan, for example, jumbo-sized American packaging is considered gluttonous.

Aesthetics. In Japan, consumers are said to "eat with their eyes as well as their mouths." That means that packaging is more artistic. Trying to sell a product with plain-Jane, generic wrapping would be a turn-off to Japanese consumers; it would be regarded as not having respect for your product.

Color. Other countries read more meaning into colors than Americans do. White is often considered a color of purity, but in some Asian countries it’s associated with death — not a good marketing strategy for health-food products.

Travel-worthy promotions

Similar to product and packaging modifications, you’ll need to re-evaluate your promotional efforts.

TV and print media may be restricted in other countries, which will drive up advertising costs. TV may not even be an option in some places because it doesn’t reach enough people.

Government regulations may impact your advertising. For example, you can’t show nudity in U.S. television ads, but you can in Europe, where nudity is viewed as natural rather than sexual. In some countries, you may not be able to use children in ads or mention competitors’ names. And when it comes to e-commerce, other countries also have much stricter privacy policies than the United States.

Make sure your promotional efforts aren’t undermined by poor language translations (see sidebar). That means hiring translators who are experts in the culture of the country that you’re targeting — just being bilingual won’t cut it.

Make sure that your brand name travels well; otherwise, it’s better to alter it. For example, in European ads for Diet Coke, "Coke Light" was substituted because the word "diet" has medicinal connotations.

Similarly, make sure that celebrity spokespersons possess universal appeal — otherwise you’re wasting endorsement dollars. That’s one reason that Michael Jordan gets paid so much; his recognition is extremely high worldwide.

Cultural differences have a huge impact on what features you stress in promotional materials. Suppose you’re selling cameras. In Germany and Japan, you’d want to stress high-tech functionality. But U.S. camera bugs want to push a single button and have everything work; for them, you’d want to stress ease of use. In Africa, where cameras are less prevalent, you’d want to promote the value of taking pictures.

Even trade-show tactics can differ drastically among countries.

Trying to generate customer leads at a trade conference in Hamburg, Germany, Compendit Inc. conducted a classic American promotion: Throw a business card in a box for a chance to win a bottle of wine. "The response wasn’t as good as we thought it would be," says Kevin McDonald, co-founder of Compendit, a Menlo Park, Calif.-based provider of analytic business solutions that opened an office in Germany this spring. "We found out that it was considered a little too gimmicky. Germans are more skeptical than Americans. They were reluctant to part with their business cards and wanted to know what we were going to do with it."

Sticker shock

Pricing is yet another adjustment. When U.S. companies take their products and services overseas, they expect to get the same price — or higher.

Besides tariffs and taxes, you have to factor in the cost of intermediaries, fluctuating economies and exchange rates, translations, packaging and transportation. Yet despite these additional costs, you may have to accept lower profits to build brand awareness and market share. Local competitors may be getting help from the government, either through subsidies or protective tariffs.

Homework pays off

Do as much upfront research as possible. The Department of Commerce is a great starting point and provides a variety of programs to help with market research. Another good source are small business development centers (SBDCs); many have designated international trade centers that offer counseling and information. But don’t rely exclusively on domestic research; at some point you have to visit the country.

In past years, a company would first build for its own market, then go to other countries and adapt their products for the new markets. But a smarter global strategy is to do your homework and standardize as much as possible from the get-go. That way you don’t have to reinvent yourself every time you enter a new market.

Read more about exporting in the August [2001] issue.

Writer: TJ Becker