Adapting to a New Market: The Key to Successful International Expansion
Expanding into international markets is a strategic decision that empowers entrepreneurs and organizations to grow, minimize risks, and optimize resources. This initiative allows them to export products and services beyond their borders, tapping into new customer bases and simultaneously reducing operational costs. Furthermore, international expansion provides access to valuable customer databases in new markets, facilitating entry into regions with no prior commercial relationships.
In addition to these benefits, internationalization enables diversification, access to human talent, knowledge capital, and technological advancements, providing significant competitive advantages. Establishing a global presence solidifies a brand's reputation through recognition and credibility in international markets, a crucial aspect of positioning oneself abroad.
Advantages of International Expansion
Undoubtedly, the surge in exports has demonstrated to investors and entrepreneurs that internationalization is an ideal path for growth beyond domestic borders. Some of the key advantages include:
1. Increased Customers and Revenue
Internationalization opens new markets, presenting a tremendous opportunity for investors and entrepreneurs to expand their customer base and source necessary inputs for their production processes. Acquiring customers from each new market translates to both business growth and increased revenues.
2. Enhanced Risk Management and Positioning
International markets provide the perfect stage for introducing original products and services, contributing to a positive revenue flow. Diversifying the market helps avoid dependence on a single market, reducing risks associated with market fluctuations.
3. Improved Competitiveness
Expanding into new markets necessitates innovation and improvement in products and services to meet the needs of a broader customer base. This drive for improvement enhances brand positioning, opens doors to new labor forces, and keeps organizations updated on current market trends.
4. Cost Savings
Initiating operations in a new market can lead to foreign investments, cost-effective logistics, and legal and fiscal incentives from various governments for investing in the region, resulting in significant cost savings.
5. Access to Cutting-Edge Technologies and Ecosystems
Internationalization creates networks that improve organizational operations and manage innovation. Access to the latest technologies, industry ecosystems, and trade agreements positively influences organizational processes and product quality.
In summary, the internationalization strategy provides organizations with competitive advantages by expanding their presence into international markets, capturing new customers, sales, and profits.
Critical Considerations Before Internationalization
However, the decision to expand internationally should not be taken lightly. It requires a thorough understanding of the implications on the brand, internal and external operations, and management. Therefore, it is crucial to navigate the process consciously and remain committed to its successful completion.
During this stage, it is indispensable to engage with international legal and tax advisors specializing in foreign trade, specifically in areas such as taxes, fiscal matters, accounting, legal services, and global business consultancy.
These professionals must navigate aspects such as international trade regulations established by the World Trade Organization (WTO), transaction billing methods governed by agreements between importers and exporters, and stay updated on tariff laws, VAT regulations, and exemptions for goods and exports.
The Importance of Market Research and the Marketing Mix
Before embarking on internationalization, thorough internal and external research is necessary. This involves asking critical questions to assess the readiness and adaptability of the business to the international market. This preliminary phase also includes defining the strategy for entering and positioning the business in the new market, a process commonly referred to as the Marketing Mix.
Are You Ready to Adapt Your Business to the International Market?
The changing times, digital transformation, and continuous global economic crises compel companies to adapt to stay relevant in the future of commerce. In 2021, exports accounted for nearly 27% of our country's GDP, highlighting the significance of international sales.
Before initiating the internationalization of a company, it's essential to ask specific questions to determine readiness. This analysis should cover both internal and external aspects. Choosing the right target market and identifying opportunities and threats is a crucial task that demands serious consideration.
What is the Marketing Mix?
The Marketing Mix is a strategy that companies use to analyze their internal situation, strengths, weaknesses, and design a new action plan focused on launching a product or service into a new target market.
The purpose of the Marketing Mix is to ensure, before launching into the target market, that the product or service meets the needs of the audience, making the effort profitable. It serves as a roadmap for the business.
To define a Marketing Mix strategy, consider four primary variables: Product, Price, Distribution, and Promotion, known as the 4Ps of Marketing (PRODUCT, PRICE, PLACE, and PROMOTION).
Expanding the 4Ps: The 7Ps of Marketing
In the case of service or industry companies, three more variables come into play: People (PEOPLE), Processes (PROCESS), and Physical Evidence (PHYSICAL EVIDENCE). This expands the framework to the 7Ps of Marketing.
Defining a Marketing Mix Strategy
1. Product
Begin by analyzing your product or service, considering the target market. This includes both tangible and intangible elements such as packaging, labeling, warranty, and post-sales service. Ask questions like:
What need does my product or service fulfill?
Does it require any modifications or adaptations?
Are there legal, health, or environmental regulations it must comply with?
Who is my target audience, and how do they behave?
2. Price
Define the price of your product or service, along with other costs related to your activities, including production and exportation. Take the necessary time to establish the price, as it is the only variable in the Marketing Mix that generates revenue.
3. Place
Equally important to price is determining how your product or service will reach the target market. Analyze different channels, considering factors such as transportation, logistics, and points of sale. Ask questions like:
Will there be an online channel?
What transportation will we use?
Does our product require warehousing?
Will there be intermediaries?
4. Promotion
As crucial as the previous three, this variable communicates the existence of your company to the target market. Define communication strategies, both online and offline, adapting e-commerce and social media for other markets. Consider:
What type of communication will I undertake?
Is it online and offline?
Are my e-commerce and social media adapted for other markets?
What advertising strategy will be most effective?
5. People
This modern addition to the Marketing Mix focuses on the entire team that makes up the company, including employees and suppliers. Taking care of them is an investment. Their representation of your company's values and image is one of the most effective promotion strategies.
6. Process
Use this variable to define the mechanisms and processes needed to delineate your product or service from inception to acquisition. Clearly outline each process, from design to production, and set goals for each stage.
7. Physical Evidence
This final variable concentrates on the company's image, encompassing all elements of your product or service. This includes your e-commerce platform, physical spaces, decor, ambiance, images, etc. It essentially relates to what your audience perceives of you.
Adapting to a new market is a critical step in the journey of international expansion. A comprehensive understanding of the advantages, coupled with meticulous preparation through market research and the Marketing Mix, is vital for success. By addressing internal readiness, understanding the target market, and implementing a well-defined strategy, businesses can navigate the complexities of internationalization and thrive in diverse global landscapes.
In this transformative era, businesses that embrace internationalization with dedication and awareness will undoubtedly find themselves at the forefront of a global marketplace, reaping the rewards of increased customers, enhanced competitiveness, and sustained growth.
To ensure a seamless and successful internationalization process, consider partnering with Mexpando, your trusted advisors in business expansion. Mexpando provides the expertise needed for a successful expansion. Contact Mexpando today and embark on your journey to conquer new horizons in the Mexican market.
Álvarez, A. (2023). INTERNACIONALIZACIÓN: 5 CLAVES PARA ACCEDER A NUEVOS MERCADOS. Retrieved from ATREVIA: https://www.atrevia.com/blog/internacionalizacion-5-claves-para-acceder-a-nuevos-mercados/
BLITA. (2022). La expansión internacional, una gran oportunidad para su negocio. Retrieved from https://www.blita.com/es/noticias/la-expansión-internacional-una-gran-oportunidad-para-su-negocio
Brown, T. (2022). 4 Steps To Enter a New Market and Expand Your Business Through New Market Development. Retrieved from Brandfolder: https://brandfolder.com/resources/entering-new-markets-through-business-development/
GLG Insights. (2021). 5 Things to Consider Before Entering a New Market. Retrieved from Harvard Business Review: https://hbr.org/sponsored/2021/01/5-things-to-consider-before-entering-a-new-market
IPEX. (2022). ADAPTACIÓN AL MERCADO INTERNACIONAL: MARKETING MIX. Retrieved from https://ipex.es/global-news/articulos-de-interes/adaptacion-al-mercado-internacional-marketing-mix/
Kroshkina, D. (2021). 7 consejos para entrar en un nuevo mercado y experimentar un crecimiento rápido. Retrieved from Entrepreneur: https://www.entrepreneur.com/es/estrategias-de-crecimiento/7-consejos-para-entrar-en-un-nuevo-mercado-y-experimentar/404835
Vision Edge Marketing. (2023). HOW DO YOU PREPARE TO ENTER A NEW MARKET? Retrieved from https://visionedgemarketing.com/improve-new-market-entry-success/