November 12, 2015 | By HSBC Bank Canada |
Foreign Market Knowledge
The thirst to grow and evolve leads many Canadian companies to set their sights on foreign markets. No business, however, can hope to flourish in an arena it does not understand. For the best chance of success, organizations planning to grow globally must match their desire to expand with an equally enthusiastic pursuit of in-depth market knowledge.
A recent report by The Conference Board of Canada entitled Selling to the World: The Keys to International Business Success* identified market knowledge as one of four key factors necessary for Canadian organizations to thrive in foreign markets. The other three keys are skilled executives, innovation capabilities and international networks. And, there are four ways that understanding your market will potentially help lead to global success.
Committing to Market Orientation
Developing insight into a foreign market is only possible once a company has made a commitment to having a market orientation. That means having a dedication to giving customers the best possible product or service by tailoring it to their specific needs.
In turn, market orientation drives firms to seek in-depth market knowledge to help them excel at three core activities: prioritizing which foreign customers to pursue, knowing the best way to meet the needs of those clients, and how best to adapt their products to international customers’ needs.
Selecting a Foreign Market
Deciding where to begin a global expansion can be overwhelming. By starting with a foundation of market orientation, organizations can focus on investigating where their goods and services will be in the greatest demand.
For example, when Manitoba-based Ag Growth International decided to expand outside Canada, its leaders took the time to carefully study which countries were most in need of their agricultural equipment. Based on thorough research, the company chose to move into Russia and the Ukraine, where there was the highest need for its products.
Choosing the Best Approach
Once a company has decided where to expand, it must then select the best approach to successfully enter its chosen markets. All approaches—acquisitions, direct sales, opening foreign offices—have their pros and cons. The more a business knows about its potential customer base, the greater chance it will have of successfully penetrating the market.
The leaders of Symbility Solutions, a small software company in Ontario, wanted to expand internationally but knew they didn’t have the means to establish foreign offices. Instead, the firm used resellers based in the local markets. The company recognized that these partners would bring existing customer relationships and a familiarity with the market that would ease the expansion process.
Adapting to New Customers’ Needs
A company with a market orientation does not develop products in isolation and then hope that customers will buy, but instead adapts its products and marketing approach to meet the specific needs of the customers it’s targeting.
For example, in the early 2000s, Ontario-based IMAX’s efforts to get commercial theatres interested in using its technology were continuously thwarted by the substantial costs customers would have to bear. Eventually IMAX realized it had to adapt its vision for expansion to the needs of potential clients. The company responded by making its technology more affordable and redesigning its theatres so they could fit into existing cinemas.
In-depth market knowledge is an indispensable tool for Canadian companies looking to take their products and services into the global marketplace.
HSBC offers a network of over 70 countries worldwide including over 167 outlets in 56 cities in China^ and 150 years of experience helping international businesses succeed. We bring unparalleled market knowledge to clients looking to expand across borders. That’s why HSBC can be your trusted advisor to navigate the markets as your company executes on its international vision.
Explore more about Selling to the World and what it takes to global success, download the full report here.
*Published in June 2015
^Network numbers as of March 5, 2015.
Issued by HSBC Bank Canada
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