The 7P Internationalisation Framework
What we are seeing now is the amalgamation of these two growth drivers with retailers looking to utilise their domestic experience in online retail and combine this with their branding to provide international multi-channel.
Yet retailers following this path and looking to expand their businesses abroad are often faced with challenges - a lack of understanding and experience within the local market, business models that do not fit within regional dynamics, problems with brand image differentiation and an absence of localised customer service.
The Approach to International Success
With over 18 years of experience in multi-channel and 5 years of internationalisation experience IVIS Group is well-positioned to assist you through local market knowledge, connections and solutions to give your business global reach and competitive advantage.
Using our experience we have defined an approach to international success and packaged this into the 7-P internationalisation framework outlined below:
Entering a new market can require repositioning of your brand to ensure maximum impact. This must be balanced with the power and core strength of existing brand image but ensure that you are aligned to local shopping trends for the market you are entering.
There are many things that influence the brand positioning for a new market, but there are several that illustrate this well. One strength your brand will have in a new market is exclusivity – bringing a new range of products or a new approach to service to a market can fuel growth.
Listening to the customer is incredibly important when entering a new market - engaging with and involving customers in the development of your brand is critical. This will also increase loyalty and align customers to your brand, which can be further strengthened through the use of personalised or targeted promotions to different customer segments based on lifestyle.
Trust is a third area that must not be neglected and in many markets will be the difference between success and failure. Customers need to trust your brand to be feel comfortable purchasing from you and this trust can be built through security with payments; reliability in delivery; and strong customer service.
In developing positioning for a new market it is also important to understand the strengths of that local market. For example, some markets excel at customer service and provide innovative approaches to enable you to communicate with customers in real-time. Others have found agile and cheap ways to manage fulfilment with an impressive network of vans and bikes delivering products at a low cost. These lessons should be captured and utilised and can even be applied globally.
The first question you need to answer when looking at international expansion is whether to enter with a partner or alone. This decision will sometimes be dictated by the market you decide to enter, with certain markets having strict legislation requiring companies to enter only via a partnership. Tesco’s partnership with Samsung in Korea and Lotus in Thailand and Wal-Mart’s partnership with Bharti in India are just a few of the examples.
Other countries welcome international brands openly, but even then there are other considerations that may drive you towards a partnership model. Working with a local partner will certainly make it easier to establish the business and will offer insight and knowledge into the local market and customer base which would otherwise take longer to acquire.
An alternative approach is to partner with an online provider. Entering into partnerships with market places such as Amazon, eBay and Taobao is an effective way for retailers to test the ground, effectively manage investment, mitigate risk and reach local consumers. This allows for a more global reach and penetration of markets without the demands of establishing a physical presence.
This also raises new questions and drives further forms of partnership. The most obvious question at this stage being where to locate stock – will you deliver from your domestic base and work with an international shipping company or find local partners to work with and hold stock locally in regional distribution hubs. There are costs and benefits associated with each approach that need careful consideration, but two factors will be key to the decision – the expectation and demands of local consumers and the availability of partners to meet those expectations in the local market.
Another area of consideration and key to multi-channel success is the availability of localised content. Creating compelling customer content is a key factor in driving growth but it is a challenge in most retailers domestic markets let alone overseas. Identifying partners who understand the local consumer and local market to create content will be key. Different customers have very different demands on the level and style of information they expect to see.
IVIS Group has developed a strategic research approach – SSCAN – which forms part of our MCm2® methodology. Using our team of experts and network or partners we can provide the insight and understanding you need before entering new markets.
Expanding internationally requires a clear organisational structure with well-defined responsibilities between the head office and regions and must provide empowerment for local leadership teams.
Some of the organisational structuring will again be driven by any legal and market guidelines. Certain markets for example have a federated approach which requires even greater regionalisation to ensure compliance with local regulations.
With the move into multi-channel it is also important to make a clear definition of responsibilities between the traditional bricks and mortar side of the business and the emerging online teams. When starting with a new organisational model it is advisable to make use of a shared services model for the business for key functions such as finance.
Using the MCm2® methodology, IVIS Group can help you to obtain a comprehensive assessment of the multi-channel capabilities, strengths and weaknesses of the organisation. By mapping the vision into a set of capabilities and KPIs we can define the organisational model needed to make the business succeed.
The approach must clearly define capabilities and measurable KPIs for each role which can be measured and assessed to provide continuous improvement. The Human Resources teams must work to align training plans and ensure cross-team knowledge sharing to accelerate the globalisation of knowledge.
Determining what you want to offer when entering a new market it is important to align the product range to the customers. With a wide range, selecting the products that provide alignment between your brand and the market is critical. This may also include introducing some local brands as part of your range mix.
A vital factor in the decision will be the availability of product stock in the market, how quickly it can be replenished and how easy it will be to deliver in the local market. Distance, temperature and service capabilities will all play a role in the decision. Yet these too can represent opportunities and there have been success stories of retailers in the northern hemisphere selling their summer range of goods in the southern hemisphere during their winter trading season.
All customers in every market have a demand for information about the products they are purchasing, but the richness and the depth of information required can differ between countries. Some information you will be required to display will be dictated by policy or regulatory compliance, other drivers will come from the customers themselves.
Quantity of information, for example, is an indicator of a depth of knowledge and understanding of your products in some countries, while in others, customers may feel that if there is too much data, the real details of the products will be lost in the sheer volume of information presented.
Using our MCm2® methodology, IVIS Group have developed a decision matrix to support range selection and product planning for international markets. Our Sonetto® Product Information Management software helps retailers to provide rich customer centric information to customers across those markets.
Most retailers have made significant investment in technology and systems and are naturally looking to leverage these investments when expanding internationally. However, it is important to understand that systems designed to fit in a mature market may be too complex for smaller markets.
The focus of the business must be on core ecommerce processes and it is important to identify and deliver the systems that meet these core demands but provide the agility and flexibility to adapt quickly to the market dynamics.
Achieving the balance internationally is often a challenge. However, there are key things that any system must provide for each market you want to operate in:
- Localisation features that offer multi-lingual capabilities
- Multi-currency payment processing
- Fraud protection
- Regulatory compliance
Moving beyond the basics, international markets need to be supported in achieving growth. This means providing systems and solutions that can give them accurate and rich product information, personalised and targeted promotions and a centralised view of customer information.
IVIS Group has developed the Sonetto® Retail Suite to provide a powerful Pricing & Promotions Management (PPM) platform as well as a Product Information Management (PIM) system. Sonetto® Retail suite also provides an end-to-end multi-channel ecommerce platform – IVIS Commerce Services (ICS). This platform builds on the foundation of Sonetto® to provide order management, customer management, stock and delivery management as well as payment processing and multi-channel storefronts across web, mobile, kiosk and tablet.
Expanding internationally increases the pressure to provide well defined processes and stronger controls in managing the operation. Having documentation on all operational processes can compensate for a lack of experience in the given market and provides a clear guide to support the business.
However, it is important to ensure that the processes are adapted to take account of local markets and the localised approaches to different stages of the trading cycle. There are many examples of retailers who have tried to adopt a global business process model and push this into international markets and not had the success they expected.
With many international markets being new to multi-channel trading, the level of information and guidance needed is far higher and must not be underestimated. Everything from the structure of a marketing plan to the best method for content and photographic creation will be required in some markets.
With IVIS Group’s MCm2® retailers are able to define the vision, business model and roadmap for the organisation. We have also developed and defined more than 100 processes and guideline documents for online trading and these can be mapped to your organisation to provide a shortcut to developing successful international operations.
Achieving growth in an international market as we have shown is dependent on a number of factors, including product assortments, pricing, and promotions. However, achieving differentiation and maximising revenue comes from knowing your customers, owning the relationship, and targeting the product, price and promotions to the customer.
Yet while promotional activity is critical, the choice of how best to execute must ensure there is a balance between the three drivers of: meeting local market expectations; your own commercial aspirations; and the core values of your brand.
While a particular market may be associated with heavy discounting for example, if this does not align with your brand values, it is important that you define a clear marketing strategy and execute against it.
Targeting is the key. The ability to use customer data and analytics to develop personal promotions delivers the maximum benefit to the customer and focuses them on the products they are most interested in without overwhelming them with promotional offers.
Providing consistent promotional behaviour across channels is critical in any market, and each market has a different level of maturity within different channels. Markets across Asia for example have a far higher adoption rate for mobile and use this to deliver SMS and geographical based promotions in high volumes to consumers.With our Sonetto® Solutions, IVIS Group has an award winning promotions management tool that gives retailers central capability to globally control and execute customer targeted promotions across all channels – in-store, online, through a kiosk, tab, via mobile & catalogues.