Three Fundamental Strategies for Market Globalization

Marco Capuano Apr 5, 2023 SMEs Global Market

This year I attended the Kitchen and Bath Industry Show, which took place in Las Vegas, NV. from January 31st to February 2nd. I noticed many attendees from Europe, more than in previous editions of KBIS. This is not surprising as the United States is currently the largest furniture market in the world. In fact, according to Statista revenue in the US furniture market amounts to US $252.90 billion in 2023 and the market is expected to grow annually by 3.98% (CAGR 2023-2027).

We all know that expanding into new geographic markets can be very exciting and rewarding but also extremely risky, in particular when the targeted market is complex like the U.S. In fact, poorly planned expansion into a new market can negatively impact a company’s balance sheet as well as future growth plans.

Let’s look at three of the main aspects that can’t be ignored if you want to grow internationally.

Three Fundamental Strategies for Market Globalization
Image by jcomp on Freepik.

Having a global DNA

If you want to grow internationally you need to have an organization that supports your global ambitions.

Having a global DNA impacts, from the very beginning, your organization, recruiting practices, company’s culture as well as the business strategies and vision. So, the earlier in its life a company builds and supports a global mindset, the better it is positioned and organized to expand into different markets. A company that hires more people with international expertise, that values employees who speak other languages and are infused in other cultures, not only can benefit from different perspectives, but has a better possibility to succeed in its efforts to expand into new markets. Simply by avoiding some basic mistakes that companies with a non international workforce tend to make often. Thinking that the same product offering and marketing strategy in the US or in France works for any customer around the globe is a wrong assumption and mistake that companies often make.

So, no matter what your offering is or how well you have been successful in your market, you will need to adapt the value delivery for the market you want to enter in. This means that if you open a subsidiary in the U.S. you employ local professionals and do not send a group of expats who do not really understand the market and the culture. In addition, your marketing material must speak to American customers and not Italian or French ones.

You cannot successfully enter a market without a good knowledge of the market(s) you want to access, a solid plan and a strong and precise execution.

Have a solid plan and execute it

It seems redundant but still many companies, no matter what their size is, often undertake the data collection about a market in an unstructured manner and do not assess the opportunities and risks. You cannot think of entering into a new market without having a good understanding of the industry, identifying future directions and dynamics that may impact the business, analyzing the competition, assessing potential barriers, identifying sales channels, understanding industry practices and consumer preferences, identifying regulatory and industry requirements, setting up a strong pricing strategy, etc. Basically, you need to have a good business plan. In order to have a good business plan, you need to invest time and allocate financial and human resources on the project, and very likely seek the assistance of external advisors. I often hear from foreign companies that the U.S. is a huge market. This is the first misconception. The U.S. is not a market, but 50 different markets with different rules and standards. The U.S. has a very complex legal system and you need experienced professionals to address day-to-day compliance in areas like state taxes, payroll, etc. In addition, the market in NYC is different from the market in Dallas, Texas or in New Orleans, Louisiana.

So, it is important to always keep in mind the specificities of each market and that international business is not just an expansion of your domestic operations. It is a complete new business with different requirements and considerations which are unique to those new markets.

You need distributors

Conquering the U.S. furniture markets without building a distribution network is a very hard task. A good distributor does not only sell your products, but provides support, customer services, carries inventories, promotes your brand, identifies market trends, competitors positioning and shares its knowledge with you. So, a distributor is your best ally and you should consider it as an integral part of your team. It is, therefore, your role to provide as much support and tools for the distributor to be successful. Besides supplying the distributor with marketing tools, training, and strategies to ensure it is competitive, you also need to make sure that you have good pricing strategies that allow your distributors to be competitive if you also directly market your products on e-commerce platforms.

In markets of the size of the U.S. you will need to create a widespread distribution network in all the states. Often your distributor may require exclusivity in the territory they cover stating that without an exclusive territory, it has limited incentive to allocate adequate resources toward development of sales. This makes sense as a good distributor will invest resources to promote sales and your brand. However, to mitigate the risks of being stocked with a distributor that does not do a good job, your distribution agreement may state not exclusivity, and assign the area to one distributor. In this way, if the distributor meets the objectives nothing changes, while if he does not perform the manufacturer can still appoint another distributor.

Expandigo supports you

As we all know, finding the right partners who could support your global expansion is a time consuming and challenging task. This is where Expandigo can support your essential research for global partners by helping you identify the right partners by accessing over 3 billion professional profiles and almost 23 million companies.