Having operated your business successfully in Singapore, and given how Covid 19 has impacted so many companies, this may be an excellent time to consider spreading business risk by growing your business beyond our shores. Many brands leverage their brand equity to enter new markets and increase global recognition. There are many regional routes to increasing your brand footprint, including setting up your corporate-owned outlets, joint ventures, franchising and, for the larger SMEs, expansion via merger and acquisition.
Regardless of the expansion strategy, you select, it is never advisable to make the bold step of entering a new territory without first defining your international growth strategy. Any business that wants to break into a new market must begin by asking what its’ competitive advantage is and what differentiates it from other brands. It then needs to dedicate time to producing answers to three big questions: Which new markets to enter? With what strategy? With what type of structure?
Building a business model for a growth strategy that addresses these questions and the company’s resources and capacity will define its international strategy. It is never one size fits all.
Suppose a business cannot offer better value than its competitors by providing enough differentiation, a lower price, or brand positioning. In that case, it will not be able to sustain a competitive advantage.
Understanding different ways of entering a new market in the medium and long term is a crucial consideration for international expansion, whether it is simply a case of exporting or sourcing locally.
While internationalization typically denotes big business carried out on a global scale, even the smallest companies can internationalize successfully with limited resources if they play their cards right. Moreover, being prominent and well-known does not mean their entries into new markets are an automatic success.
Even Franchise Giants like MacDonald have had false starts in new markets.
IN 1996 McDonald’s appointed two different local partners: One for North & East and one for South & Western India. Apart from deciding on partners, they faced several difficulties when they first arrived in India—modifying consumers’ perceptions of American food habits and adjusting to their tastes, preferences, and culture. They also encountered political opposition and distribution challenges. Creating a robust supply chain and training personnel on McDonald’s standards was also complex.
Whilst there was overall awareness of the religious differences, the first approach was only to offer vegetarian meals, alienating other groups. The diversity in local language and communication was one of the most significant components of the culture. The Indian population is diverse and complex as the nation is split between different communities, religions (e.g. Hinduism, Buddhism, Sikhism, Islam, Jainism and Christianity), beliefs and value systems. All these factors significantly influence nations’ preference for food and dining in general. Environmental and animal rights activists and religious groups met Mcdonald’s initial approach to India with massive resistance.
The initial strategy was to target the majority of the population, only to discover later that by doing that, it alienated groups.
Eventually, McDonald’s realised that what people worried about was if the food being prepared matched Indian standards. This meant creating separate food delivery lines, separate kitchens and clear communication of what was vegetarian and what was not. They also formulated a suitable pricing strategy to facilitate the high volume of consumers, targeting mainly the lower and middle class.
Even for this fast-food giant, it has taken them over 20 years to post profits.
Closer to home, many brands from Singapore enter new territories through franchising, often assuming that their critical success factors will remain the same in different territories. However, often a rude shock awaits when they realise that not everything is as they thought. Necessary drivers like Brand acceptability, Price Positioning, Menu and product mix, target market behaviour and expectations, and location selection must be considered.
The entry of Singapore Home Grown Brand Joe & Dough into Jakarta, Indonesia, is an example of a Singapore F&B operator who left little to chance in their market entry strategy. The brand owners of this brand chose to enter via a Joint venture with a partner who had an experienced team and was passionate about building F&B Brands. With the support of Enterprise Singapore, they conducted an in-depth brand strategy localisation through Astreem’s market entry program to help them transform Joe & Dough into a well-loved café in Jakarta, Indonesia. Before Covid Hit in 2020, they had opened four outlets in under 18 months. Despite the pandemic, Joe & Dough was able to sustain their business, and once the markets started to open, they immediately opened their 5th outlet.
One of their main success factors was conducting sufficient market research to understand the targeted and emerging markets and how the brand can be customised to fit local needs.
Some Different Aspects of Brand Localisation
- Brand Localisation
- Areas of differentiation with Local competitors. It is important to differentiate by having a clear, unique selling proposition. In the case of Joe & Dough, they chose to be “ THE BEST CROISSANT IN INDONESIA”. All the baked products and pastries were produced to back up their claim. Within a few weeks, through the help of Social media and word of mouth, Joe & Dough claim their position in their consumer’s minds.
- The Outlet design is a crucial touch point with their consumers, so it was essential for the brand to resonate with its target audience. So, for example, instead of building your Stores to precisely reflect the Singapore Look and feel, find out what appeals to your target customers in advance.
- Price points are also another vital area to pay attention to. Simply making a transposition of price to a different market cannot work as the spending power and who has that spending power is essential to note. As such, adjustments need to be made so that the resulting price and brand positioning are well-placed for the targeted Market.
- Being involved in setting up the supply chain is also critical to the success of an international setup. Finding the correct cost of goods and good supply quality directly impacts the business’s success. Being actively involved in this process will increase the chances you do not pay more for products than you should, allow you to establish rapport with key suppliers, and also have first-hand knowledge of the quality.
- Finally, just because we build it does not mean people will automatically come to patronise our business. Therefore, working with local marketing and digital media teams to craft successful communication campaigns is critical to business entry success.
Other Key Success Factors
- Finding a supportive partner facilitated many business entry set-up pains, from legal necessities of company entity set-up, Bank accounts, and tax registrations.
- Hiring well and developing a solid team is critical to maintaining the brand’s success after the initial launch.
- Being Well financed to see the business through the first few months of business startup
- The local partner also should be well-networked to contribute to finding good real estate options.
For brands ready to enter new markets, you must invest effort in understanding the need to determine your global strategy.
Astreem helps brands enter new markets through a comprehensive selection of avenues, from developing Market-specific Franchise strategies to Franchise partner matching and brand localisation and research.