Recently Katabolt worked with New Zealand Trade and Enterprise (NZTE) to develop a service that helps New Zealand businesses with export ambitions understand the path from considering exporting products or services to entering their first export markets. In building the service, Katabolt reflected on some of our early research into successful Kiwi exporters. The research unveiled that to find lasting market partnerships (distributors, agents, JV partners, licensees, channel partners etc.) regardless of industries and markets, each company followed some common steps.
1. Prioritise markets for development
2. Develop critical consumer or customers insights in distinct segments
3. Prove there is demand for the product or service
4. Spend time finding the right partner to meet their criteria
5. Negotiate with confidence to ensure they retain value
Whether novice exporters or shipping $100 million annually, every successful exporter focusses on just 1-2 market opportunities at a time. This enables them to find the right partner and commit to helping them establish the new market and build a lasting relationship. Once they are confident that the market is established and growing smoothly and can be managed as business as usual they can adopt a new focus.
If an exporter spreads themselves too thin too fast they will lack resources or time to develop a market effectively.
Understand the Customer
Whether it is knowing that North American contractors think Japanese trucks are too small or that Chinese consumers like rosemary in their chocolate chip cookies, understanding how your product or service is perceived in the market and what you will need to do to adapt it is critical to understanding the cost of being relevant in that market and whether you may have mass appeal or a distinct niche.
Will they Buy It?
It is one thing to have a great idea. It is another to know if people will buy it. It is important that before entering the market that you validate that enough people will buy your product in sufficient volume and at a price that will make exporting a profitable activity for your business.
By validating the opportunity directly with the market you will also begin building the shortlist of potential distributors or market partners that fit the criteria your business has developed.
Don’t’Rush Finding the Partner!
Businesses making strategic commitments to exporting are prepared to spend a 1-2 years finding a market partner if that is what it takes. The cost of changing if you jump in with the wrong partner is high. The initial investment is costly, the lost sales with the wrong partner is opportunity cost as is lost momentum. In addition, extraction from partnerships can be costly and time consuming.
So, think about taking the time to understand potential partners, their strategies, track records, capabilities and build mutual trust before diving in.
Negotiate with Confidence
With all the preparation above by the time you’re negotiating with your preferred partner you should have confidence in the value of your offer to your market partners and end consumers or customers. You will have a good picture of how you think the market should be developed and roles of you business and the market partner. This will put you in a good position to be bold in negotiations and hold your ground to retain value.
Would you like to explore how your business can implement these steps? Contact Katabolt!
Join the celebration with New Zealand Exporters who are doing well at this years Export New Zealand Exporter of the Year Awards