Internationalise your Brand Successfully
Having operated your business successfully in Singapore, and given how Covid 19 has impacted so many businesses, this may be as good time as any to consider spreading business risk by growing your business beyond our shores. Many brands leverage their brand equity and Business know-how to enter new markets. There are many routes to growing your brand footprint regionally, including, the set up of corporate owned outlets, joint ventures, franchising and for the larger SMEs, expansion via mergers 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 objectives. Any business that wants to break into new markets must begin by asking itself what is its’ competitive advantage and key differentiating factors it possesses over other brands. It then needs to dedicate time to producing answers to three big questions:
1. What markets to enter?
2. With what strategy?
3. With what type of structure?
Being able to build a business growth strategy that addresses these questions, along with having sufficient resources and capacity will define its international strategy. It is never one size fits all.
If a business isn’t able to offer better value than its competitors, either through sufficient differentiation, a unique price or brand positioning, it will not be able to achieve sustainable competitive advantage.
Understanding different ways of entering a market is a key consideration when it comes to international expansion.
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 big and well known does not always mean their entries in to new markets are an automatic success.
Even Franchise Giants like McDonalds have had false starts in new markets.
In 1996, McDonalds appointed 2 different local partners: One for North & East and one for South & Western India. Partnership selection aside, McDonalds entry into India was met with several challenges in the beginning in terms of adapting to the tastes, preferences and culture of the local customers, changing the perception of Indian consumers towards American food habits, obstruction from political parties, issues with distribution, designing a proper supply chain to training the employees on McDonald’s standards.
Whilst there was overall awareness of the religious differences, the first approach was to only offer vegetarian meals, alienating other groups. The diversity in local language and communication was one of the greatest components of the culture. The Indian population is very 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 play a significant role in nations’ preference for food and dining in general. In the beginning, McDonald’s’ initial approach into India was met with huge resistance, from environmental and animal rights activists, religious groups.
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 realized what people worried about was whether the food it produced matched Indian culture and standards. This meant that they needed to create separate food delivery lines, separate kitchens and clear communication of what was vegetarian and what was not. It was even more important that the target market was made aware of their commitment. They also formulated a suitable pricing strategy that facilitates the high volume of consumers, targeting mainly the lower and middle class.
Even for this fast-food giant, McDonald’s has taken them over 20 years to post profits. Smaller companies can take this to heart.
Study Case in Singapore
Closer to home, many brands from Singapore enter new territories through franchising, often assuming that their key success factors will remain the same in different territories. Often a rude shock awaits when they realize that not everything is as they thought. Key drivers like Brand acceptability, Price Positioning, Menu and product mix, target market behaviour and expectations, location selection are all factors that need to 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 localization to help them transform a Singapore brand to sit in a positioning that has since become a well-loved café in Jakarta, Indonesia.
Doing sufficient Market Surveys and research to understand the targeted market is important to identify a brand’s targeted market and how the brand can be customized to fit local needs.
You should look at different aspects of brand localization as follows:
1. Brand Localisation
2. 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.
3. The Outlet design is a key touch point with their consumers and so it was very important for the brand to resonate with their target audience. For example, instead of building your Stores to exactly reflect the Singapore Look and feel, instead find out in advance what appeals to your targeted market.
4. Price points are also another very important area to pay attention to. Simply making a transposition of price to a different market cannot work as the spending power as well as who has that spending power is important to note. As such, adjustments need to be made so that the resulting price positioning and the brand positioning are well placed for the targeted market.
5. Being involved in setting up the supply chain is also critical to the success of an international set up. Finding the right cost of goods and right quality of supply has a very direct impact to the success of the business. 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 on the quality.
6. Localise Marketing. Finally, just because we build it does not mean people will automatically come to patronize our business. Being able to work with local marketing and digital media teams to craft successful communication campaigns are also critical to business entry success.
Other Key Success Factors
- Finding a supportive partner facilitated many of the business entry set up pains, from legal necessities of company entity set up, Bank accounts, tax registrations.
- Being able to Hire well and develop a strong team is also critical to maintaining the brand success after the initial launch.
- Being Well financed to see the business through the first few months of business start up
- The local partner also should be well networked so as to contribute to finding good real estate options.
For brands that are ready to enter new markets, it is important you really invest effort in understanding the market to determine your internationalization strategy.
To this end Enterprise Singapore does provide government grants to support companies in entering new markets through strengthening their core capabilities through Brand localization, Franchise strategies, business digitalization, quality operations management.