By: Jay Gronlund
There is no question that developing countries represent an important source for new revenue, but the challenges and risks are also unprecedented. For example, even mature companies see emerging markets as a primary source for growth in the future (e.g. Avon +9% in sales and Procter & Gamble up 11% in 2008 in Asia-Pacific), and are committed to training their managers to become more proactive in capturing opportunities in these regions. Such industry leaders also recognize that real progress in these markets will be achieved by developing completely new approaches to planning, marketing and selling.
While every situation is different, a common driver for success will always be how well companies enhance and leverage the core value of their brand, especially how the brand should be adapted to the unique opportunities in each market. Here are several key initiatives that companies can use to successfully build value and penetrate these developing countries:
- Create a Market Expansion Road Map – many companies simply have not evaluated the market potential thoroughly enough, or in a way that translates to a very specific, actionable road map that reflects the best opportunities. This is a very complicated, yet critical planning task. One key step is to segment the market in order to identify the highest potential customers and to adapt the specific value offerings that relate best to the particular needs/interests of these customers. Such segmentation can be based on a variety of criteria, most common being predefined categories based on behavior, profitability, value, attitudes and demographics. In retail, sophisticated chains often use lifestyle segments such as:
- Families with children
- “Empty nesters”, including the emerging baby boomers
- Impulsive, “grab ‘n go” shoppers
- Value conscious buyers
A good example of how retail chains use this segmentation is Tesco in the UK, which removed candy at the check-outs because moms with children did not want their kids asking for candy on the way out (they replaced it with financial offers such as credit cards, insurance offers, etc. which were more profitable). Fully understanding the most promising segments for distinguishing your brand and building loyalty will help management maximize the brand value for these top priority customers.
- Reposition for Stronger, More Relevant Brands – every global brand should maintain the same “brand essence” (i.e. it’s “DNA”) around the world, but a re-positioning might emphasize different features for each market to make sure a brand is truly relevant and more appealing, depending on the local needs/desires and competitive situation. The starting point and most important issue for any re-positioning is the target customer. Careful research on the specific needs (functional and emotional) of each potential customer segment will reveal important insights that will help determine which particular feature would make the core benefit genuinely credible and compelling. The perception of this brand benefit or promise will enable marketers to enrich their value offering for each market segment, so it is critical to think local, not global on this issue. From a practical standpoint, the brand positioning should also act as the core compass for developing and implementing all new product innovations, line extensions or special services, marketing programs and selling tactics.
- Ideation for New Ideas – Ideation is basically a creative brainstorming session or technique for generating fresh ideas for new product innovations, marketing, selling or promotion initiatives, and operating efficiencies. A common and egregious mistake is to expect an expansion “formula” that worked in one country to be successful in another. Generating truly distinct ideas that are relevant, practical and buzz worthy requires an entirely new thinking process. Ideally a productive innovation session should be supported by prior research on trends and local market opportunities, an imaginative yet pertinent framework for creativity, a variety of participatory managers (e.g. with different expertise and both right and left brained people), novel ideation techniques, and an experienced, professional facilitator from the outside.
- Balance Disciplined with Entrepreneurial Thinking – it would be naïve to expect managers from the U.S. or Europe to successfully transfer their inherent style and best practices to these emerging markets. Instead they should complement their professional discipline with the flexibility and adaptability needed for these dynamic markets. It is of course essential for local managers to learn the fundamental principles of sound strategic planning, insightful branding, innovative marketing and creative, smart selling. But it is even more important to be proactive, imaginative and opportunistic for capitalizing on the emerging tends and new ideas from an ideation session
- Support with Management Development and Training – completely understanding these principles can be a real challenge for managers in developing countries, but applying them to their local practices will be even more critical. How to develop tomorrow’s successful manager reflects another paradigm shift highlighted by the current recession. Human talent is the most important resource of any company, and training in the future must do more than simply develop basic skills; it must combine this learning process with a realistic, practical simulation that enables participants to actually use these principles to find new opportunities, think more creatively, and build better value for their brands in their immediate markets. In emerging economies in particular, managers and employees have a strong desire for professional training due to several reasons:
- Professional development is considered a significant benefit, and so will enhance employee morale and loyalty (this is very important in China where turnover is high).
- It creates a common corporate culture and language for all employees, which will make sharing of new ideas more effective.
- It makes it easier and more efficient to roll out new products and marketing/sales initiatives around the world.
Building More Distinct Retail Brands in Singapore
The retail situation in Singapore is very unique in that it has many sophisticated shoppers looking for premium goods, but retail stores lack any credible, distinctive qualities as they cater to this luxury driven audience. Shopping malls multiply, become bigger and add fancy features, but are still not very innovative on how they distinguish themselves and appeal to different customer segments. The growing prosperity in Singapore, while benefiting most high-end retailers to date, will eventually lead to a crowded competitive environment where only the more customer focused, distinctive retail brands will flourish in the long run.
There are several ways retailers can segment their market in Singapore to adopt a more customer-centric approach. The ideal is to go beyond just identifying a need and selling a product the customer wants; a smart retailer should anticipate the full range of activities and experiences of the customer and product. It is also prudent to study successful retail operations in foreign countries. For example, Best Buy in the U.S., the popular chain of assorted electronic products, has identified its most valuable customers (31% drive 80% of its revenues) and importantly has segmented them by varying needs and lifestyles. It has collected data on 75 million households over the past seven years, even developing a unique way to categorize their core customers, each one with a distinct face and profile, such as:
. “Buzz” – the young technology buff
. “Jill” – the suburban soccer mom
. “Barry” – the wealthy professional guy
.“Ray” – the family man
The retailer who is willing to invest in thorough customer research to identify new insights for a more customer-centric approach will be the winners in Singapore. This will require recognition that each store has its own unique neighborhood and customer profile, and will leverage this learning with proper
Training and re-arranging the in-store landscape accordingly. Keeping the same company brand essence and offering such customized services and products will be the best way to build a distinctive retail brand over time.
In summary, one of the best opportunities for business expansion is in these high potential developing markets abroad. However, leveraging this opportunity requires companies to maximize the perceived value of their brand in order to counter the growth of lower priced, indigenous products and respond more proactively to the needs of local customers.
A compelling value proposition is critical for establishing a strong presence in these emerging markets, importantly at an early stage so that companies can develop a credible bond with your target customers and build brand equity over the long run.
Would your business benefit from brand building in Sinapore?
image credit: daysofthundr46 and donp17
By: Jay Gronlund
Working in foreign markets can be stimulating and educational, yet cultural nuances can also become an insurmountable barrier for some. No region is more different from our Christian rooted cultures in North/South America and Europe than the emerging markets in SE Asia. Their attitude, behavior and even business practices are influenced by vastly different values, shaped centuries ago by their religion, culture and unique history. Any initiative to develop a business growth partnership with Thai managers must first address these cultural differences.
Several years ago, Withlin Worldwide conducted a survey among executives in Asia and North America asking them to prioritize their cultural values by importance. As you can see below, North American values are much more egocentric, consistent with original Protestant Ethic beliefs, while Asian values are much broader, even consensus-driven, and outside the focus on the individual:
- Hard Work
- Respect for Learning
- Openness to New Ideas
- Freedom of Expression
- Personal Freedom
- Individual Rights
- Hard Work
- Personal Achievement
- Thinking for Oneself
Recently I had an opportunity to do two workshops in Thailand, the first on “Ideation: New Innovations in Marketing” and the second on “How to Position Brands for Social Media”. Both involved looking into the future, to determine what their marketing and selling environment will be like over the next 5-10 years, and whether/how they could leverage certain trends and technological advances. I was prudent enough to acknowledge that I was no expert in these areas for Thailand, and requested a local Thai expert to work with me when discussing the local implications of these ground-breaking topics.
What I did not fully appreciate was how sensitive and aware Thai business people are of these pioneering trends taking place in the West. They were astute enough to know, mainly from the past, that many of these evolving customer and business trends will soon have a significant impact on their own selling and marketing practices in Thailand. The main difference, as in so many in-depth discussions about B2B and B2C transformations, was culture.
For the ideation workshop, I highlighted transformative trends evolving in the West in three areas: customer needs/behavior, distribution and retail/trade channels, and new innovations/practices in marketing, promotion and media, supplemented by many examples from the West. The audience was fascinated. But then the real practical, thought-provoking questions surfaced – i.e. will these same trends take place soon in Thailand, and whether/how they would be different and affect their business climate. The discussion was open, rich and stimulating. Everyone had a different opinion. But behind each person’s prognosis was the ultimate question of whether and how new ides would actually be accepted by customers and business leaders. Every prediction reflected basic Thai values and cultural nuances, which was deemed essential for local success.
The discussion in the second workshop on the impact of new social media like Facebook, YouTube, Twitter and LinkedIn was more nuanced and insightful in that most were already very familiar with these social media vehicles. While usage of social media is now dominated for personal connections, the bigger question was how businesses could harness the reach and engaging benefits of these media to grow their business. The key was that content mattered more than the medium, and the core message must be consistent with Thai values. These discussions also reminded me that basic business practices in Thailand were heavily influenced by their consensus-driven culture, so that these individualistic or one-on-one media were almost an anathema to many of them at first.
These workshops were successful mainly because the framework of Western trends and innovations acted as a “door opener” for the audience to ask some fundamental questions on how these practices could be transformed to work in the Thai culture and business environment. This discussion would never have been so open and constructive without the initial recognition of these important cultural nuances, however. Credibility was critical, and this meant listening and learning from these local experts and the audience about creative ways to apply new ideas and these novel social media practices in Thailand.
Have you experienced a similar “barrier” of different cultural values when working in Asia? We would appreciate hearing about them, and also would be happy to share details on these workshops with you. Please let us know.
image credit: DennisSylvesterHurd and duncan
By: Paul Hesselschwerdt
Now may not seem like the time to be talking about doing business in Japan. The people of Japan have so many deeper concerns right now, the topic of business growth partnerships may not appear appropriate. We empathize because we are working with our customers in Japan now.
After doing business in Japan for over 20 years, we appreciate the resourcefulness and resiliency of the Japanese people. They have just been through a terrible ordeal, but we see they have already begun the rebuilding process.
We are beginning a series on “Successful Selling in Asia,” and we can think of no better country to start with than the most developed Asian country for doing business, Japan.
As western companies from the US and Europe continue to expand in Japan, they are consistently confronted with significant cultural differences that often make the selling approaches that have been successful in the west very difficult to apply in Japan.
Here are 5 such selling approaches we’ve learned that work in Japanese business culture:
- RESPECT THE HIERARCHY: Sales people in western companies are taught to continuously ‘sell-up’, meaning they should make contacts and influence customers at higher levels in their organization. Japanese business culture requires respect for the organizational hierarchy which requires peer-to-peer contact. A Vice President in a Japanese company will only meet with a VP from the supplier organization or someone higher. Sales people and their companies who wish to build relationships at senior levels need to be prepared to leverage their own senior managers far more than they do with their western companies.
- BE VERY PATIENT: The speed at which sales processes move in Japan is much slower than what sales people are used to in western countries. This is because establishing the relationship with the customer is the most important factor in any business transaction. Whereas in the west a sales person might expect an introductory meeting followed by meetings where specifics of a transaction might be presented, clarifying needs, then a proposal and closing. In Japan, many meetings, sometimes spanning a year are devoted strictly to building a trusting relationship. Once this is done the customer often proposes giving the supplier a small contract to test their reliability, quality and trust worthiness.
- LISTEN AND QUESTION CAREFULLY: Every sales person knows that listening and asking questions is the key to successful selling. While this is also true in Japan, customers there expect sales people to wait for them to tell the sales person their challenges, needs, etc. Western sales people who are used to a more aggressive approach of asking open-ended questions to discover customer needs are sometimes frustrated by this expectation that they should be more patient in listening for the customer to take the lead in these discussions. The key is to use fewer questions and ones that encourage the customer to talk about their needs, etc. However, sales people need to demonstrate respect by listening carefully for all of the messages in the customer’s answers and by not probing too deeply into the customer’s answers.
- RESPECT HARMONY, ESPECIALLY IN NEGOTIATIONS: Respect and avoiding ‘losing face’ are fundamentals of Asian and consequently of Japanese culture. To western sales people, these 2 principles may seem to conflict with the tricks and tactics of negotiating deals. In negotiations, accept that customers expect you to respect their negotiating position, even if it may seem unreasonable at first. Japanese customers also view negotiating on a single deal as one event in the overall relationship. Therefore they may expect you to give more in this deal in return for a better deal for you in the next negotiation. Lastly, remember that having more than 1 person from the supplier or the customer side increases the risk of losing face for the Japanese customer. If possible negotiations are best done 1 on 1 with the person with whom you have a strong, respectful relationship, so the official office setting is not the best place to finalize a negotiation, an after-work drink in a more private setting could be more appropriate.
- RELATIONSHIPS ARE EVERYTHING: Though high-trust relationships are essential in all business cultures, in Japan they are the foundation of success. Without a high-trust relationship there can be no business. However, Japanese customers understand that problems will occur in business and therefore value the response of the supplier as much as the occurrence of the problem itself. Here suppliers have an opportunity to reinforce the high-trust relationship with customers by fixing the immediate problem quickly and completely and ensuring that the same problem does not recur.
The Japanese have a unique, successful business culture. By understanding and adapting to this culture, western business people can drive business growth in Japan as successfully as in their home markets.
This is the first in our series on successful selling in Asia. We are very interested in hearing your perspectives on Japan and other Asian countries. Do the selling approaches and success factors we described match your experiences?
image credit: Melvin Gaal (Mindsharing.eu) and NASA Goddard Photo and Video