What is Marketing?
Marketing is “the strategy, structure, and process of creating value that customers want. According to the American Marketing Association’s definition (2007), “Marketing is an activity, a set of institutions, and a process for creating, communicating, delivering, and exchanging offerings that are valuable to customers, clients, partners, and society as a whole.
It is not a one-way imposition on the customer, but rather the creation of a system to understand the customer’s desires, create the value the customer seeks, and deliver it to the customer. The important point is to focus on the customer, not on selling existing products. To understand our customers, we conduct a wide variety of research and analysis.
Marketing Methods for Overseas Expansion
BtoC marketing measures
BtoC marketing targets individuals who are general consumers, the price is fixed, and the product is sold via store visits, mail order, or retail. Possible sales methods include selling directly through stores overseas, licensing the company’s brand to local companies, cross-border e-commerce (selling online from Japan), and wholesaling products to local retailers. Promotional methods often include using local influencers for SNS marketing, sending information to local target customers via websites, and utilizing media such as Internet advertising.
BtoC marketing is characterized by the fact that the decision to purchase is made by the individual purchaser, so the purchase decision is made quickly and the transaction amount tends to be smaller than in BtoB marketing.
BtoB marketing measures
BtoB marketing targets companies. Prices are often quoted according to the customer’s requirements. In addition, sales will be made either directly or through partner companies, such as by visiting customers. Even overseas, exhibitions, telephone calls and e-mails, seminars, and information dissemination on websites are used to acquire potential customers, and sales are made through actual customer visits and meetings or, if on the Web, through online proposals.
Rather than advertising to the masses, promotions are conducted by appealing to buyers in the industry at trade shows and by making one-on-one proposals to prospective companies through phone calls and e-mails. In recent years, BtoB companies have also adopted digital marketing techniques, such as using targeted Internet advertising to attract new customers through the dissemination of information on their websites.
BtoB marketing is characterized by the need for organizational decision-making within a company, which means that it takes time before a purchase is made, and transaction amounts tend to be high.
How to Develop a Marketing Strategy for Overseas Expansion
Marketing strategy means deciding “to whom”, “what value”, and “how to provide”. In addition to researching and analyzing your customers, gather and analyze information about the internal and external environment in which your company is currently operating. After that, we determine the target (to whom) that can solve the problem using the company’s strengths and has a clear advantage over the competition. Then, the company determines the value it can provide to these targets and how it will deliver that value (specific products, prices, distribution channels, and sales promotion methods).
This is different from the “sales strategy,” which aims to increase sales through efficient use of company resources, in that it creates business by creating new value and new markets.
1. Internal and external environment analysis
As Sun Yat-sen famously said, “If you know your opponent and know yourself, you will never be defeated in a hundred battles. To this end, we first deepen our understanding of our customers, markets, competitors, and ourselves.
The first step in the analysis is to establish objectives and hypotheses for each analysis. Once you have established objectives and hypotheses, it will be easier to gather information and conduct in-depth analysis. For example, in the case of BtoC, you need to narrow down the age, gender, and background of your target customers, and set objectives such as “We want to know about their lifestyle habits,” “We want to know about changes in the environment they are facing,” etc. For example, “We want to know if they are becoming more health-conscious,” etc. If you make a hypothesis, such as “they are becoming more health conscious,” it will be easier to collect relevant data.
Information gathering methods can be divided into quantitative and qualitative research, depending on the type of data to be collected. Qualitative research collects numerical data such as facts and statistics. It can be obtained through reports and surveys conducted by government research organizations in various countries, as well as through telephone surveys and web surveys conducted by research firms. Qualitative research uncovers the underlying reasons for people’s behavior, such as their feelings, opinions, and thoughts. The depth of buyers’ perceptions and needs can be determined through interviews and other methods.
Analysis methods include:
- 3C analysis (analyzing Customer, Competitor, and Company)
- SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats)
- PEST analysis (analyzes the macro environment of Politics, Economy, Society, and Technology)
- PEST analysis (to analyze the macro environment of Politics – Politics, Economy – Economy, Society – Society, and Technology – Technology).
In particular, when expanding overseas, it is necessary to first conduct basic research to understand the market and trends in the destination country and fully analyze the competitiveness of the company through SWOT analysis, etc. before entering the market. A unique differentiation strategy that can compete with local competitors is necessary.
2. Determine target customers
Next, determine the target customers, which is the “to whom” part. To do this, segment the market and understand the market structure. Segmentation is the process of creating small customer groups (segments) by subdividing and classifying markets or customers based on similar needs or characteristics.
Today, customer needs and behaviors are becoming more diverse, and mass marketing that targets everyone no longer fits. Therefore, it is necessary to select customer groups in segments where your products and services can best satisfy them and give you an edge over the competition.
The axes used for segmentation (segmentation) include geographic variables (e.g., national, regional, and local population density, weather trends), demographic variables (e.g., age, gender, family life cycle, household size, income, occupation), and psychological variables (e.g., social class, lifestyle, personality, purchase motivation), behavioral variables (product knowledge, attitudes, usage scenarios, etc.).
However, these subdivisions are infinite, so in order to do this efficiently, the “4Rs of segmentation” are used as a guideline to narrow down potential target customer groups: Rank (priority), Realistic (scale effectiveness), Reach (reachability), and Measurable (response). Response.
- Priority Rank (ranked by importance from the perspective of the company’s business strategy)
- Realistic (consider whether the segment is large enough and has the potential to be profitable).
- Reach (considers the difficulty of reaching the segment’s customers with the product/service)
- Measurability-Response (consider whether the segment’s size, purchasing power, and characteristics are measurable, and whether the response can be measured once the product/service is delivered).
After segmentation and narrowing down the customer groups, determine the “target customers” by identifying those customer groups for which you feel a particularly strong sense of challenge, can provide the best results by leveraging your strengths, and have a clear advantage over the competition.
3. Determine the value you offer
Once the target customers are determined, determine the value to be provided to them. In today’s world of various products and services, you need to have a reason for customers to choose your product or service. Verbalize what problems your product solves for your customers, what benefits it provides to them, and how it differs from your competitors’ products.
Communicating the value, benefits, and uniqueness of your product to customers and enhancing its value is called the “value proposition. The value proposition serves as a guideline not only for marketing but also for your company’s corporate activities. When considering the value proposition, we should consider the three types of strategies advocated by Michael Porter, the god of marketing: cost leadership strategy (aiming for the lowest price in the industry), differentiation strategy (aiming to provide unique value and high added value), and concentration strategy (focusing on a specific industry, customer, or application). (concentrating resources on a specific segment of the market)” will be helpful. It is said that choosing one of these strategies as a direction is a good idea; taking multiple strategies leads to dispersion of management resources and inefficient management. You should always ask yourself whether your company’s value proposition is one that disperses management resources.
4. Consider how to provide value
Once you have determined “to whom” and “what value” you will provide, the next step is to consider how you will deliver that value to your customers. Since the 1960s, the 4P framework of “Product,” “Price,” “Place,” and “Promotion” has been used to consider specific ways to deliver value to customers. In the 1990s, the 4C theory was proposed: “Customer Value,” “Cost,” “Convenience,” and “Communication.
- Customer Value corresponds to the “value to be provided” mentioned above.
- Customer Value corresponds to the “Value Provided” mentioned above.
Convenience refers to the ease and convenience with which a customer can obtain a product, and is considered from the customer’s perspective, including not only the place where the customer purchases the product, but also the ease of use of the website and the means of payment and pickup.
In addition to sales promotion methods such as Internet advertisements and events (Promotion), the communication with customers (Communication) is to determine how to convey messages to customers, what to make them feel, and what kind of relationship to build with them. The 4C’s are the “what to offer” and “how to offer it”.
Once the “how to provide” is defined in 4C, the base of the marketing strategy, “to whom”, “what value”, and “how to provide” is completed.
5. Select measures that match the strategy
Once the “who”, “what value”, and “how” are defined, a concrete schedule and action plan are developed and implemented. Build an executable schedule in consultation with internal resources and partner companies, and create a system to deliver value to your customers.
Key to Successful Marketing for Overseas Expansion
Conduct preliminary research
Prior research is the key to successful marketing for overseas expansion. It is necessary to create a system based on actual data, local competition, and reasons why your company will be chosen, not just on a hunch that you heard this was popular or that you thought you would be accepted because you heard of this custom. It is even more important to research local information in advance because the lifestyle and sensibilities of Japanese people are different from those in foreign countries. There is a possibility that there may be a need for the product but no need at all, or that the product may be needed for a different purpose than in Japan.
Establish a marketing strategy
It is important to define “to whom,” “what value,” and “how to provide it” as a marketing strategy, whether in Japan or overseas. In particular, when doing business overseas, you may face unexpected problems and difficulties, and if you have a clearly articulated value proposition shared within the company, you can smoothly decide how to use management resources and what direction to take in order to rebuild the business.
Narrow down your products
Rather than promoting all products and services sold in Japan to overseas markets, it is a good idea to focus on only those products that you have determined, based on your research and marketing strategy, to be of value and competitive advantage needed in the country in question, and to demonstrate the benefits to customers and your past achievements. In addition, since there may not be an immediate response or there may be a sudden inquiry, it is necessary to have an inventory and an internal system in place to be able to respond at any time.
Understand local needs and market changes
When expanding overseas, it is especially important to first conduct basic research to understand the market and trends in the destination country, and to fully analyze your company’s competitiveness through SWOT analysis and other methods before entering the market. When entering a new market, a unique differentiation strategy that can compete with local competitors is necessary.
Without a competitive advantage in your products, it will be difficult to maintain orders from overseas customers. You must maintain your competitiveness by actively gathering information on local needs and market changes, and developing products based on a quicker grasp of these needs than your competitors. It is important to always keep abreast of local market prices and trends among suppliers, and to objectively understand the position of your products.
Understanding the language and culture of the target region
Understanding the language and cultural background is important in overseas marketing. Different cultural backgrounds have different lifestyles and customs. Different regions and cultures have different issues and challenges that are important in their daily lives. In order to obtain such local information, it is important to have a partner who is familiar with the language of the target region and who is willing to make an effort to understand the culture by visiting the region and getting close to the daily lives of the people there.
In addition, there are increasing opportunities for both BtoC and BtoB sales and promotional advertising on the Web, and in SEO, it is necessary to know the keywords that local target customers search for in response to issues, as if they were native speakers. In this case, it is preferable to develop and implement a Web marketing strategy with a marketer who is familiar with the local language.
Communicate with local partners and distributors
When selling through a local partner or distributor, it is especially important to check the credentials and marketing capabilities of the distributor. If you rely on your partner or distributor to handle your sales, you have less information about customer response and needs available to you, and it is harder to see whether their promotional and sales activities are in line with your marketing strategy. Therefore, it is important to maintain close communication with local partners and distributors by asking them to submit sales reports, gather information that will lead to product improvement and development, and conduct market analysis. In the case of distributorship agreements, it is advisable to make pricing decisions on your own and avoid exclusive agreements.
Establish an internal structure
Overseas expansion requires a company-wide effort. It is important to build an internal structure that allows you to deploy the necessary human and managerial resources when necessary, and to steadily work on a feasible plan in advance. If you leave everything to a small number of people within the company or to outside consultants, you may miss an opportunity because you have your hands full with the domestic business, even if you receive an inquiry, or your domestic business may also be adversely affected.
Conclusion
Many companies think that the high quality products and services they have sold in Japan will be accepted overseas, but in reality, there is no need for such high quality products and services in the local market, or there are already a number of competitors. It is difficult to expand overseas without prior research and a marketing strategy. It is important to conduct careful preliminary research and determine “to whom,” “what value,” and “how to provide it,” using the company’s own management resources, and to work systematically on these issues, rather than simply introducing products that sell well in Japan to overseas markets.