Market Development Strategy - global opportunities for manufacturers

Ed Marsh | Sep 19, 2013

330 Million person domestic market

That's all you need to know, right?  After all as a US manufacturer you are sitting comfortably astride the world's largest economy.   You have everything you need at your fingertips - from raw material & component supply; through technology, automation and skilled labor; via efficient distribution & infrastructure; right out to an enormous pool of buyers (regardless of whether you are in the B2B or B2C sector) with income to expend.

Sounds like a perfect scenario.  So everything's right with your world then, right?

Why the pause?  Oh, it's harder to grow than it used to be?  It doesn't need to be if you understand how to #SellMoreThere - and along the way even #SellMoreHere too.

Manufacturing equilibrium

American manufacturers were pretty well kicked around late in the 20th century.  Perhaps you were one of them.  At the very least you have benefited from the lessons learned, no doubt implementing management techniques which were developed during the maturation of manufacturing and enterprise management over the last 30 years.

But your domestic competitors have ready access to the same body of expertise.  You may implement and execute more, or less, expertly, but there is little potential advantage which you can arbitrage to rapidly accelerate growth ahead of US competitors.

Concurrently your foreign competitors are facing growing challenges.  Low cost manufacturing is an ephemeral advantage.  Growth brings rising wages, costs & expectations.  International engagement involves more regulation and cost of compliance with international labor and environmental norms.  Their cost vs. quality value trade-off becomes less appealing as the former rises quickly while the latter approaches parity more gradually. 

Your manufacturing advantage

But as an American manufacturer you have, in the global context, an enormous tailwind.  Energy costs are not only falling in real terms, but confer a substantial relative advantage over manufacturers in other parts of the world facing at least stable, and often rising, energy costs.  In short, you've got a meaningful competitive edge in pricing through the growing delta in energy input costs.

But that advantage isn't ubiquitous.  Each of your domestic competitors has exactly the same tail wind.  While the reduction in energy costs is welcome for your business and advantageous for customers, it doesn't help you gain relative market share at home.

To capture the global opportunity, your strategy must build upon the virtual arbitrage edge which the energy input pricing disparity provides to you.  That means that you must sell into markets where domestic manufacturers are hamstrung by higher energy costs.  The bottom line is you need a market development strategy to proactively identify key global markets which are expanding rapidly, where your product fits (perhaps with minor localization) and where demographics are favorable for a long runway of growth.

Go global

While growing numbers of American companies are exploring export sales growth opportunities, many launch tentative initiatives which skip important strategic planning and preparation.  In some cases they succeed, and in some cases not.  But in nearly every case the potential isn't realized as fully or quickly as it might have been, and key risks are left unmitigated.

A 'best practice' market development strategy should be built around an integrated multi-disciplinary approach that draws on financial, cultural and biz dev skills, and should include attention to risk management, market selection, sales channel development, marketing, government relations and other fields.  There's a right way to do it - and there's a casual, accidental way.  As you might imagine results and risks are commensurate in each case.  Bottom line?  The expertise of someone who's got global bruises and experience is a critical component of such an effort.

Many markets value US products highly.  And US manufacturing costs are no longer an impediment to success in those rapidly growing markets.  Not convinced global growth is worth considering for your company?  Maybe these two factors will give you a nudge:

 - You may well be able to pay taxes on profits earned on export sales at a rate of 50% your domestic profits.  Same work (OK, maybe a little more)....twice the benefit

 - Today's internet marketing tools can be implemented in ways to concurrently identify vast numbers of international opportunities right from your office in the US AND SIMULTANEOUSLY give you a huge competitive advantage over your domestic competitors that are constrained by traditional b2b manufacturer marketing approaches.

Talk about win-win-win!!