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Emerging Markets Fuel International Growth

By: Greg Seminara,Export Solutions

This year I was invited to speak at the annual distributor event for an important European brand.
At their Distributor of the Year awards ceremony, it was inspiring to see distributors from countries such as China and UAE receive recognition for shipment increases of 30 percent, 50 percent or more ! Success strategies in these markets did not require huge marketing campaigns or payments of large listing fee's. More often than not, the emerging market distributors were classic entrepreneurs, that deployed guerilla marketing techniques to build incredible sales momentum for this brand.
This first hand experience reminded me of the potential of expansion into emerging markets.
Business conditions may be challenging in Western Europe and the USA, but there are many new markets enjoying exponential growth.  Fortunately, there are many qualified distributors in most Asian, Latin American and Middle East countries anxious to pioneer good products. Emerging markets are not without risk and initial volumes might be modest. However, growth oriented companies should invest in some of these countries we've mentioned on our Hot Countries 2016 list. One billion potential customers is a number too big to ignore. Listed below are some considerations for expansion into emerging markets.

1. Low initial sales volume, but low investment too !
Calibrate expectations to include shipment of an initial container (or pallets in some cases), even if the countries population exceeds 100 million people. Start slow and build awareness and distribution. The good news is that trade spending and marketing budgets are much lower on a per capita basis. Naturally, your shipments  will be proportional to your investment, but market entry is possible without the bundles of money required to enter a market like the USA, France, or Italy.

2. Focus on Top 20 percent of Market and Global Retailers
Aim for reaching upper class and middle class business executives families in your first expansion phase.
This segment of the population can translate to a market of 50 million people in Brazil or 30 million in Mexico. These families may have had previous exposure to your brand through international travel and more likely to be open to experimentation of different foods and flavors. For these consumers its more about product availability then just price. Target countries with global retailers (Walmart,Carrefour,Tesco etc.) where your brand has a track record. Frequently, these stores differentiate themselves overseas with an international assortment. Frequently, these retailers are seen as upscale in emerging markets even if they appeal to lower income customers in their home country.

3. Strong Distributors Exist in each Country
Outsourced solutions such as distributors minimize the investment required for market entry in emerging markets. Funds can be dedicated to market development versus hiring your own sales force and building a warehouse. For example, Export Solutions database tracks 1,427 distributors in Asia,735 in the Middle East, and 1,199 distributors in Latin America. Most of these distributors represent other international brands providing their clients with instant critical mass.

4. Visit each Country at Least Once
No experience replaces a market visit. This allows you to understand the market, consumer, and conduct due diligence on potential partner candidates. The business may not warrant frequent visits, but an initial examination will provide market intelligence that will last a lifetime.
Your long range international plan should include a mix of investment focus:
1) Grow existing businesses in core markets
2) Strategic investment for entry into high potential, adjacent countries
3)Targeted expansion into emerging markets.

Better to start now in emerging markets while the cost of entry  is relatively low !

Export Solutions Hot markets for 2016