'When in Rome...'

'When in Rome...'

by Harlee Sorkin

The path to successfully penetrating a market with any givenproduct requires anticipation, planning, execution, flexibility and, let's faceit, a little bit of luck. Once the growth curve of a product begins to taper, itseems logical to examine foreign markets as the next step toward re-invigoratingproduct sales and just repeating the process. The problem is, it's not nearly sosimple. The paths to success in foreign markets are often as varied as thecountries themselves. There are a host of factors that influence internationalmarketing--economic, legal, cultural--as well as the established businesspractices and sales channels. Any one of these factors can preclude a productintroduction, but having the right guide can make all the difference.

The first question to ask before an international marketingventure is whether the product makes sense for the intended new market. Does theproduct fill a need, and can it be made available to customers at a reasonableprice? It has been said that money makes the world go 'round, so first examinethe economics of the situation at all levels. Compare the price to local ratesfor the same or similar ingredients. Compare price to competing products, aswell. Can added value be justified? Remember, the customer needs to make a valuejudgment, not the seller. The role of exchange rates needs examination. Based ontremendous swings in currency valuation of recent years, this is not a point tobe taken lightly. Can you absorb fluctuations in either direction, or could aslight dip in the wrong direction price your product out of the market?

You will almost certainly need help from local counsel inexamining the regulatory environment of each and every country being considered.It's no secret that major discrepancies exist around the globe in the waynutritional products are regulated. In the United States, where high cholesterolis considered a disease state, red yeast rice extract is a drug. This fact wouldcertainly be difficult to explain in China. The inconsistency has been the causeof many a headache for this industry, but if the European Union can agree on asingle currency, then there's at least a glimmer of hope.

Cultural factors are perhaps the least tangible of all marketingconcerns. Ironically, these frequently play the most significant role in thedecision making process. The term "culture" is something of acatch-all and includes technology, communication, language, media, aesthetics,education, religion, attitudes, values and social structure. There's no way toaddress the specifics that may arise, but it's probably wise to keep an openmind to the cultural standards of individual locales, draw upon local assistanceand be willing to adapt to the situation. By their very nature, brands, graphicsor slogans hold no value in a place where they are not yet known. Don't bestubborn. Instead, try to think like a local. If your actions aren't leading tosales, you're not effectively marketing your product.

The hard part comes after the assessments have been conducted,plans have been drawn up and budgets have been allotted--putting theinternational marketing plan into action. Multinational corporations sometimeshave the luxury to draw on their own resources in whichever country they'relooking to operate. The rest of us have to take a few more steps. When doing thegroundwork, you likely drew on local resources. These are a good starting point,at least for references, and possibly for partnerships. Just as there are setsales channels, business practices, order of operations and expectations foryour own market, there's likely a set script for how to proceed in other marketsas well. Outsiders tend to have little ability to change these practices.Instead, try to exploit these pre-existing conditions.

When looking for a partner, most people look for a company thatoperates in the industry, but not in the same category. Such a company may haveinterest in developing a new product niche for themselves but isn't likely to bethe best at doing what you're trying to do. It may seem counterintuitive, but itis worth looking into partnering with a company that does operate in the samecategory. Such a company might be considered a competitor in the same market,but in a foreign market could be the greatest ally, so long as they don'tdirectly compete with your product.

Let's say, for example, that you're looking to market a Ginkgobiloba product for circulatory health. There's some logic in partnering with amanufacturer of grape seed extract. First of all, they're already going to havelocal contacts in the botanical extract arena, as well as have knowledge ofcirculatory health and the challenges of marketing such an antioxidant in thelocal market. The two products can co-exist on store shelves, so rather thantrying to beat them at the register, take advantage of their experience andinfluence them to promote your product rather than demote it.

International marketing requires a heightened level ofconscientiousness and flexibility. The willingness to set aside one's ownexpectations and adapt to local standards is critical. Be aware of establishedsales and distribution channels. There's no need to go it alone. Take advantageof the channels and look to partner with those who have a proven track recordoperating in international markets. While you certainly wouldn't consider adirect competitor, the rules change in foreign markets. Someone you might noteven consider domestically may be just the right fit under differentcircumstances.

Harlee Sorkin is a principal with Mentor Management, LLC, aprivate equity management firm based in Champaign, Ill. He has more than 10years management experience in the natural products industry.