Exporters envy the massive clout and impressive results generated by multinationals such as Nestle & Procter and Gamble. These powerful brand builders succeed in emerging markets by adhering to a well defined new business development process. Their approach represents an ideal mix of global category knowledge with local execution. Recapped below are key elements on how multinationals win in international markets.
Multinationals invest in both qualitative research and syndicated data.
Significant effort is directed to understand local consumer behavior, shopper insights, and attitudes to new product concepts. This information is paired with syndicated data from providers such as Nielsen and Euromonitor . This allows companies to study trends and calibrate the “size of the prize”.
Innovation & Adaptation
New product ideas sweep the globe these days. There are too many “me too” products, offering little differentiation to global buyers. Multinationals dedicate technical resources to identify the “next big thing”. Their point of difference is the ability to adapt these big ideas to local tastes and habits. This may be achieved through a unique marketing approach, adjustment of a flavor profile, or a distinct package appropriate for a local market.
Manufacturing facilities close to your consumers supplies a tremendous competitive advantage.
Direct benefits are sourced from reduced overseas logistics costs. This translates to lower shelf prices or more money to invest in marketing or higher gross margins. A plant is usually associated with scale and creation of a local subsidiary. These employees and their families become “brand ambassadors” for the companies where they work. A factory presence creates spending and pride in a community. Factories may be expensive, but co-packing may be another option.
Close to the Customer
Multinationals typically enjoy special customer “intimacy”. Their critical mass and importance to the retailer create more of a balanced relationship and partnership. The multinationals local management may be empowered to make decisions quickly without needing to check with an overseas office.
Multifunctional Team Support
All commercial teams have sales people, but multinationals may offer “on the ground” customer support in other critical functions. This includes product supply, financial, marketing , information technology, and customer service. It takes a professional “team” to win in our business, not just a “super salesman”.
Large companies offer the resources to invest in consumer marketing and trade support programs. All brands allocate dollars to these activities, but multinationals fund their launches to include television advertising, social media and consumer sampling. They entice retailers with large discounts and rebates in return for impactful shelf visibility and massive end of aisle displays.
Multinationals scale allows them to offer competitive pricing in a market. Frequently, their pricing strategy for a new brand will include a structure at parity versus current players or even at a savings. This creates a measurable advantage versus brands entering with “super premium” pricing and little marketing support.
Multinationals frequently serve as “Category Captains” yielding benefits and respect from retailers. They are viewed as important sources of category trends,insights, and analysis. A multinational brings knowledge from adjacent categories or markets that can be applied to a new product launch.
New product launches from multinationals contain high expectations, focus, and support levels. Typically, these initiatives are aimed at creating new brands with sales measured in the millions . New product launch plans feature three year sales targets and investments. Normally, these brands lose money in year 1, break even in year 2, and most budget positive cash flow for years 3 and beyond.
International marketers win with a “Glocal” approach. This involves leveraging “global” category expertise and resources and adopting it to a “local” market. Multinationals win because they offer critical mass in the country of their corporate headquarters , as well as international countries.