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INDUSTRY
INSIDER In the previous issue, our discussion was concerned with the importance of developing a process to expand a company’s GIS market. Of special importance is the decision to move into international markets, and the fact that such a decision must be established as a process, not a single event. This means that specific steps must be taken in order for the company to grow globally and enter new markets profitably by minimizing risks and managing costs. As it is with winning new clients, contracts and markets in the United States, selling is a systematic process that must be firmly established to reap the rewards – much like a farmer plants seeds and later harvests the crop. A specific methodology for the GIS marketplace has been established, one that was summarized in part one of this series. This process is called 3G™ – the GIS Global Growth Marketing System. Its twelve components are described below. 1. An obvious way to discover important national or regional GIS opportunities is to perform an in-depth market study. However, such markets cannot be evaluated in isolation. A sense of the opportunities must be validated by other industry sources and by independent marketing organizations. 2. Competitive forces throughout the region should be evaluated as to the positive or negative effects they may provide regarding a barrier to entry. Many times the presence of a competitor with a slightly different set of products or services can actually be beneficial to a U.S. firm entering that market. This is because said competitor will have already educated the market to accept the technology or services being offered. Market education is a major cost in any marketing plan, and the competition could help lower this cost while, at the same time, provide an opportunity for a new GIS player. This presumes that the new player can differentiate its offering in a positive way and provide equal or better quality. 3. Barriers to market entry are also key elements for proper analysis. In some cases there are few such barriers. Although viewed as a positive indicator by many, this may also imply that competitors can enter the market just as easily. If one’s market-entry campaign is successful, the probability of attracting competitors in the same area is extremely high. In the marketing world, nothing attracts competition more quickly than success. As a result, the more successful are your efforts, the quicker you will attract competition. This means that planning follow-on steps is critical to sustaining one’s performance. On the other hand, there may be numerous barriers to market entry. For example, a key element to selling in Japan is the use of native language characters in software design and manuals of instruction. This is equally critical in the Chinese market. Such a major investment in product development is vital to achieving major successes in these areas. One advantage is this that your early investment will later prove to be a barrier to entry for your competitors. 4. Costs and timeline development for market entry should be determined based upon up-to-date information. Although many organizations can provide a company with basic market data, the key to success is to collate this data into a system that will ensure market success. Having the information alone is not enough to create this success. Levels of effort, cost estimates, a timeline for achieving specific revenue, organizational partnering, and client objectives need to be organized into a comprehensive plan that will direct all activity in the target market. 5. One of the most effective ways to enter global markets is to team up with partners both in the country of reference and on a global basis. However, picking the wrong partner can be risky. It is important to identify companies that possess proven track records prior to entering into any such agreement. Checklists are available to help you perform the necessary due diligence. Some firms fear theft of their GIS technology, services and strategies by their international partners. One can eliminate this concern by creating strong personal relationships with key management players within those partnering companies. Once away from the United States, these relationships hold the keys to success. Good GIS technology is simply the "union card" that allows you to play in the market; it will not guarantee success all by itself. The relationships you forge with overseas companies will guarantee success. They are your insurance against failure, so invest well in them. 6. One often overlooked aspect of penetrating international markets is its strategic value to the corporation. The reality of global market expansion must be based on quantifiable performance objectives. These objectives are tangibles that act as guidelines, milestones and targets for success. However, intangibles and long-term goals cannot be ignored. Having a global presence – even if it is simply focused on the penetration of select international GIS markets –increases the valuation of the U.S. firm for any potential investor or acquirer. Higher valuations mean easier access to bank lines of credit, outside loans, and investment capital. In addition, partners and distributors are more easily attracted to working with such a firm, and employees are more highly motivated to perform and remain on the job when exciting growth plans are part of the picture. 7. Internal evaluation of one’s own GIS firm prior to global expansion is equally critical. The company must know its strengths and weaknesses in order to focus properly. This process is referred to as a gap analysis. There are times when internally perceived strengths are externally perceived by clients and market players as weaknesses. And in the business world, perception is the same as reality. A firm needs to recognize these aspects as weaknesses and correct them prior to expanding globally, or else focus in a different area. On the other hand, a firm should recognize all the strengths it does possess and go through the gap analysis process to bring them to the fore. Once this gap analysis is completed, the GIS firm will have a more focused approach and strategy for global markets. It will become clear which countries or regions to pursue and the types of partners, representatives, or joint venture arrangements to seek out. 8. At this stage, a marketing plan must be developed that focuses on the capture of market share. Marketing is the process of researching, educating and communicating to a group of potential buyers. A marketing plan is actually your map to success. One goal is to obtain new customers and retain their loyalty as your competitors enter the same market. A plan to manage the total customer relationship needs to be developed, with a heavy focus on customer loyalty programs. 9. A sales plan for global GIS markets is designed to follow the marketing plan; that is, to prepare the target market for sales activity. Selling is a psychological process that culminates in a financial transaction. It is highly relationship-based and a much more tactical process than is marketing. It is important to design a sales system focused on winning contracts, and building as well as sustaining a filled pipeline. Selling is a process, not a single event. It is important to create realistic goals and timelines for sales to occur. In some cases it can take experienced salespeople up to two years to perform at an acceptable level. If you are not willing to invest in a sales system, do not expect to penetrate global markets. Generally the most prudent way to sell globally is through reputable partners, representatives, and distributors in the targeted region. However, the home office must invest in programs and staff to support such partners, including budgeting for numerous trips throughout the year to work with the partner in each region. Do not expect the partner to perform well without such support programs in place. 10. The strategic plan should precede the creation of both the sales and marketing plan. The strategic plan focuses on value creation within the company by focusing on areas to target for growth. The strategic plan pinpoints the structure for the future development of a marketing plan and a sales plan. It includes a gap analysis. The strategic plan must incorporate staff from the bottom up. It is not an executive exercise but rather a team implementation to strengthen and focus on areas of opportunity and growth based upon the strengths, weaknesses and resources of the entire organization. 11. The most important part of global marketing is cultural awareness. Culture is the value system that differs from one country or region to another. We are all raised and educated in certain cultural systems that vary worldwide. Because business is nothing but relationships, "people" skills are critical. There are three major cultural systems in the world. These may be defined as linear-active cultures, multi-active cultures, and reactive cultures. Reactive cultures are those found throughout Asia. Multi-active cultures are common in the Mediterranean and southern Europe, among the various Arab lands, and in Latin America. Linear-active cultures are those found in North America, northern Europe, and in Australia and New Zealand. Reactive and multi-active cultures value the relationship over the task at hand. Linear-active cultures value the task at hand over the relationship. Because of these differing values, friction can easily occur across cultures. Other examples are numerous and relate to such basics as a culture’s preferred means of communication, the attention span during a meeting, and the length of time it takes to make a decision. More personal cultural elements are focused on knowing how much eye contact to have with an international colleague, how much personal space is acceptable, and whether to shake hands, bow, nod, or simply smile. Although these are generalities, there are large elements of truth in many such cultural assumptions. Be aware of cultural nuances, or else deals can easily fall apart. 12. Finally, and most obvious, is the need to establish a communication plan with your international partners and markets. Communications will make or break the success of any global marketing plan. This is especially true in a GIS marketplace that is highly relationship-based, much more so than in other technical markets. Find out the preferred means for communicating with your partner firm’s managers and staff members. Determine the highest impact method of communicating with the local market, whether by newsletter, e-mail, fax, Web site, direct mail, or through personal visits. Remember that nothing has the impact of face-to-face meetings, especially in global markets. E-mail, faxes, videoconferencing, newsletters, mass mailings, and Web sites are valuable support tools that will move relationships and sales forward, but key decisions are made in person. Communicate frequently and consistently by using all these methods, but be sure to budget significant money and time for face-to-face efforts. In summary, the Global GIS GROWTH™ methodology establishes a structured foundation from which to expand globally. 3G involves a twelve-step process that goes hand in hand with the twelve basic principles of international GIS marketing, negotiation, and overall business operations. These twelve principles will be discussed in the final part of this series.u About the Author: |