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When Weight Watchers International decided to open its first store in China, the company wasn’t sure how Chinese consumers would respond to its service model of paying for diet education and support.
Before they launched the store, the team conducted market research and focus groups with local consumers, where they made an important discovery. Chinese consumers weren’t accustomed to paying for education as a product, says Daniel Boockvar, senior vice president of U.S. operations for Weight Watchers in New York. “They wanted to take something tangible away with them,” he says.
As a result of that research, the company created a Weight Watchers starter kit with more tangible materials specifically for China. The kit included a book and a backpack and the company gave it to every new customer. This helped them add tangible value to their offering, and eliminated a critical barrier to making the sale.
The lesson, says Boockvar, is that before a business enters a foreign market, there needs to be testing around the suitability of products and services for the intended audience. In addition, business owners need to be willing to tweak and refine their offerings before rolling them out to the public.
Small business owners may not have the capital to run formal focus groups or research markets in foreign countries, but they can approach resources such as the Small Business Administration (SBA) or ask trusted advisors to help them, says Danny Markstein, managing director of Markstein Consulting, a corporate strategy and communications agency in Birmingham, Ala. They can also network with potential partners and professionals in the country, and assess similar products to see what sells and what’s missing from the marketplace.
As part of this process, business owners need to focus on whether they can make a profit, Markstein says. “We never counsel clients to set prices based solely on competitors’ prices when they price their own product for a new market,” he says. Rather, he encourages them to ensure that the business can cover costs plus a margin, and look for ways to add value and to ensure customers will pay a premium for a superior product. This will ensure that the business can cover costs plus a margin.
For example, Markstein has worked with a company that sells telecom services in emerging economies. The company only sells in markets where customers are willing to pay extra for ease-of-use features that are not offered by the competition. Then, it prices its product higher than the competition, but offers features other providers do not. It makes the technology interface as simple as possible, and offers 24/7 customer service, he says. “That’s how they differentiate themselves, and are able to make a profit in these markets,” he says.
Small business owners should also be open to doing something brand new, if that is what customers in the foreign market are asking for, says Stan Heitz, president of Advance Genetic Exports, an international livestock exporter with three employees in Lexington, Ill. Heitz’s company ships U.S. breeding stock to clients all over the world.
Earlier this year, Heitz was filling an order to ship sheep and goats to a client in Dubai. However, the cost of shipping was prohibitive since livestock exporters must reserve a minimum amount of space on a cargo plane. When Heitz explained this, the client asked if he would add an assortment of reptiles to the order.
“I’ve never exported reptiles before this year,” Heitz says. But instead of turning his client down, Heitz educated himself on the breeds, made new connections in the reptile world, and collected 228 frogs, snakes, geckos and lizards to fill the order. He now includes an “exotic animals” category on his website.
Another aspect of agility is having the ability to send and receive international payments in different currencies, depending on the country of customers or suppliers. Using a trusted online foreign exchange service such as Western Union Business Solutions Online FX, which converts money in 135 currencies, makes it possible to meet payment needs quickly and reliably.
“The key is flexibility,” Heitz says. “When you move into a new market, you can’t be rigid about what you are willing to offer.”
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