EXPORTING ESSENTIALS: SELLING PRODUCTS AND SERVICES TO THE WORLD SUCCESSFULLY (2014)
Chapter 5. Preparing and Adapting Your Product for the Export Marketplace
You may have heard the story that Coca-Cola translated into Chinese meant “bite the wax tadpole.” (Some think it’s an urban legend.) In fact, it’s true, but the translation didn’t happen in the way you might think.”
—Phil Mooney, Coca-Cola Conversations1
Many business owners believe it is only packaging that has to be adapted in the overseas marketplace. That’s a mistake. Adapting your product to meet the needs of an overseas market is a considerable undertaking and will likely require a substantial investment of time and money.
In the following pages, I talk about how packaging and other product characteristics play a vital role in enabling international sales and what factors to consider when preparing your own product for export. I also include case study examples to better understand the process that goes along with modifying a product to succeed in the export marketplace.
This phase of business is very important because there are differences in both the cultural and physical environments across countries. You should expect that to some degree you will have adapt your product to sell it outside domestic markets before you make your first sale. You’ll be well situated to tackle this phase after you have availed yourself of the market information resources outlined in the previous chapter, consulted with local government market experts, and communicated with various sources overseas: prospective customers, wholesalers, agents, embassies, and so on.
Studying competing products in the country where you wish to do business is a great way to target what works in that market. If you cannot visit the country and scan store shelves yourself, get in touch with the American Embassy and see if it can apprise you of what products are comparable to yours.
When it is not possible to sell the standardized products and services, a small business must adapt its product if it wants a global business. And although the changes might involve satisfying foreign countries’ regulatory requirements, the biggest test is always with the end user—the customer—because that’s who ultimately buys your product or service. If customers turn their noses up at your offering, even if you get regulatory approval, there will be no sales. Always keep the customer at the top of your mind and have empathy for others’ point of view; it will lead to ideas for meeting cultural differences.
Case Study: Hershey’s Yo-Man Satisfies the Sweet Tooth of Chinese Consumers
Hershey is currently introducing a candy to China. Known in English as the Lancaster and in Chinese as Yo-Man, it is a condensed-milk candy that Hershey expects will gain it a healthy share of an estimated ¥7.5 billion (in Chinese currency, which is equivalent to $1.2 billion) Chinese market. Premium-milk candy is considered the fastest-growing segment in China’s candy market.
This is Hershey’s first launch for a new brand beyond the US market. Hershey’s goal is to expand its overall international sales to 25 percent of its global sales by 2017, up from its current 10 percent, which includes brand extensions and acquisitions. The company wants China to be its second-biggest market within five years.
Yo-Man will be manufactured in China by a local confectionary company in Hunan Province. Milk for the candy will be imported. Creating a new brand, and one that is specifically tailored for the Chinese market, is a good bet for Hershey. The company could have just as easily sold its Hershey Kisses and other related branded items without making any changes to the products, but that would send a message to the Chinese consumer that Hershey doesn’t care enough to suit that population’s particular taste buds. Or worse, the company might turn off the audience entirely by that move—forever—and open sweet opportunities for its competitors. It’s a perceptive judgment call, and Hershey has decided not to take a chance wondering what if and instead is doing what is right for the Chinese market, its budget, and its resources.
Checklist to Prepare Your Product for Export
So how do you go about getting your product ready for a foreign market, much like Hershey has done? Grab a sample of your export-ready product, get out your tablet to keep you organized, and let’s run through some rules of thumb to prepare your own product for export:
1. The name of your brand or product might work well in your local market but could have negative connotations in a foreign market’s local language. For example, in the 1950s, there was a Swedish car magazine called Fart, which in Swedish means “speed.” To Americans, however, the title meant a good laugh. Check to see what the translation of your brand’s name means in the language of the country you are about to enter. If you don’t, you will end up with a fiasco like Chevrolet had on its hands when it introduced its new automobile called the “Nova” in Venezuela—which in Spanish means, “Doesn’t go!”
2. The colors of your packaging need to take into account cultural sensitivities. What do the colors connote in the country of destination? Vibrant, attention-grabbing red is often thought to signify warning or danger in the United States, but in Chinese culture it represents good luck. A slick black package with touches of embossed gold or silver conveys elegance and sophistication in the United States and some newly industrialized countries, but in certain parts of Africa, for example, it suggests death! Even if your design principles have been foolproof for products to be sold in the United States, expect to have to scrap them and start fresh when it comes to marketing products abroad.
3. Look at the overall packaging and labeling design of your product. In addition to your color choices, your illustrations and graphics need to be appropriate, appealing, and understandable to your end user. If there is any possible way you can get opinions on your package design from actual consumers in your target market, do so. Would they buy your product on the basis of the way it looks? For example, if you put a smiling face on your package, but they take the purchase of that particular product quite seriously in their country, would your labeling be seen as trivial, cheap looking, or even offensive? Details like this matter, and they need to be thoroughly researched and addressed before shipping anything of significant value to a foreign market.
4. The size or quantity of your product itself needs to match the export country’s expectations. Your product’s size might be perfect by US standards but way too large in Japan, where the size of the typical household is very small. One Whopper may feed one American, but that same burger sold in France may make a lunch for two, or the extra burger might be tossed in the trash. If too much of your product will go to waste, it’s not economical or convenient for your consumer, and they won’t buy it.
CASE STUDY: GIVE CUSTOMERS WHAT THEY WANT
One of my past clients manufactured a very successful premium ice cream. Supermarkets throughout the United States could barely keep the decadent treat in their freezers because the demand was so great. The company wanted to build on this success by expanding internationally. It chose Japan as its entry point into the international market. The Japanese are exacting about quality and would appreciate this premium ice cream, it was thought.
The test shipment fell flat.
What happened? My client looked deeper into the Japanese culture and discovered some very important differences between Americans and Japanese. First, Americans prefer gallon-sized containers, while the Japanese prefer individual-sized containers, which fit better into their smaller freezers. My client also discovered that the ice cream had too much sugar for Japanese tastes.
The company tried again; this time using a reduced-sugar recipe in individual-sized containers and shipping a twenty-foot freezer container to Japan monthly. Over time, that one freezer container a month grew to ten a month, and the company’s business in Japan was assured.
5. Weights and measurements vary from country to country. You must label your product according to local standard measurements. The metric system is considered the global standard, but double check.
6. The standard CE mark, which ensures consumer safety, is required on many products sold in EU countries. A manufacturer that has gone through the conformity-assessment process may then affix the CE mark to the product. If you plan to do business in a country that is part of the EU, look into the benefits of securing the union’s approval, which will make your product appear safer in your target audience’s eyes.
7. Look at how and where the product is sold. Do most consumers like to make their purchases online in your export country? Or do they prefer to go to a local convenience store to make their purchases? It’s not about doing it your way. It’s about doing it in a way that the consumers of the home country prefer. Take the French cosmetics company L’Oréal, which is breaking the rules but with the hope of big payoffs. In Brazil, where women prefer door-to-door sales, L’Oréal will not be using that approach. Instead, the company hopes its sales will increase by staging beauty advisors in stores where the company’s products are sold. Jean-Paul Agon, the CEO of L’Oréal, is convinced the market will grow and that direct sales will become less popular. Is he attempting to make Brazilian women forget about that part of their culture? Only time will tell. Door-to-door vending is a long-standing custom in Brazil that has ushered millions of Brazilian women into the middle class. Some 2.5 million women, out of a total female workforce of 42 million, earn a living by doing direct sales in Brazil.2
Tip To cash in on growth in emerging markets, Facebook is making adjustments to its social platform as it expands internationally. According to the Wall Street Journal: “[India] has about 100 million Internet users mostly through desktops. But the real focus for digital companies will be on the group of 900 million-plus mobile-phone users, most of whom will get Web access for the first time over the coming years.”3 Think that Facebook will adjust and accommodate those folks? More than likely it will, especially if it fuels its own growth. Look for investments by Facebook that target lower-end feature phones as well as translations to Hindi and other languages.
8. Will you need to put a bilingual label on the outside of packages? Canada requires a French-English label. Finland requires a Finnish-Swedish one. Most Middle Eastern countries require it to be in Arabic-English. You must find out! For some destinations, the first order or trial shipment requires only a sticker on the outside of the package in the language of the importing country. Generally, this sticker should state the importing agent’s name and address, the weight of the package in the country’s standard unit of measurement, an ingredient legend, and the expiration date if applicable.
Caution Even a close translation of your product’s name might not be close enough—“Jolly Green Giant,” for instance, translates into Arabic as “Intimidating Green Ogre.”
9. Be careful of the cultural significance attached to the number of units you place in a box. Anytime you have a relatively small number of products packed showcase style in their box, check beforehand to make sure the quantity is not considered unlucky in the overseas market. Some countries, particularly in the West, find seven to be a lucky number and thirteen to be unlucky. In Japan, the number four is the sign of death, so packing anything four to a box will be the kiss of death for your marketing venture! (Not that you need to worry too much about the number of cookies in a single box.)
10.Put pictures of your product on the label of your package. A picture tells a thousand words. When Americans read “pizza” on the outside of a box, they know what’s inside. But will they know what it means in New Caledonia? Probably not. Keep this in mind when you develop packaging for worldwide sales. Illustrations are acceptable, two-color pictures look nicer, but four-color photography on the label shows it like it is. Put yourself in the shoes of the prospective customer. If you don’t know what’s being sold, why buy it? Get visual: Images speak every language.
11.Don’t skimp on packaging material. If your packaging is behind the times in the United States, don’t think you’ll be able to unload it in the world market. Customers worldwide appreciate innovation and cutting-edge technology, and they expect it from the United States. Don’t let your customers down. Keep informed on what is the newest and best in your packaging category.
CASE STUDY: KEEP AN EYE ON THE COMPETITION
My company used to export all-metal tins of gourmet nut snacks to Southeast Asia. We thought we were well received, until one customer asked why we didn’t package our snacks like a major competitor did: that company used a composite of tin and cardboard, which was safer and lighter—desirable qualities in Southeast Asia. Once we found a supplier that could manufacture the composite tin, we ordered enough labels for both the domestic and international markets. Listening to that one customer and making that one change grew our sales in Southeast Asia more than 30 percent year over one year.
12.Look for ways to extend current product applications. This is where a few months of actually living in a foreign country would really pay off. It would teach you how the locals do things and what they need to be able to do things better. You may find that if you changed the speed of a kitchen mixer, a food item in China would be made better and faster than ever before. Or you might want to reconfigure an existing vacuum attachment and it would be perfect for some out-of-the-way corners in Sri Lanka. Before you set out to do business in a particular country, ask some simple questions: How do the people there like to spend their time? What are their favorite foods? How do they clean their homes? How are their clothes laundered?
13.Make sure your electrical products are suitable and compatible for international use. If your wired product is not adjusted to the electrical standards in your target market, you’ll have all sorts of problems, especially if you have already shipped the unacceptable product! A good resource you should know about is Electric Current Abroad (http://www.trade.gov/publications/pdfs/current2002FINAL.pdf), a publication of the US Department of Commerce. It provides everything you need to know about electrical standards worldwide. If for some reason you don’t find the information you need, contact your local chamber of commerce or a government official in the country where you are about to do business.
14.How will you handle warranties, guarantees, consignment sales, and service calls overseas? Anticipate what it will take to put one of these features in place not locally but globally. Can it be done? If so, map out the logistics from start to finish and determine who will be responsible. If it’s not feasible, then don’t offer it.
15.Determine how the physical environment affects your product. Humidity, high energy costs, poor water supply, extreme hot or cold temperatures, or poor infrastructure can affect how your product holds up and works in a new market. You may only need to adjust your product to withstand a damaging environment, but if it’s a lot more than that you should choose a market that’s a better fit. If there are no roads to move your product, you can’t get anywhere. Period. Consider the differences between your home market and the foreign market. For example, when air conditioners are exported to Egypt, they must have special filters and the coolers must be sturdy enough to handle the thick dust and heat of Egyptian summers.
16.Determine how the cultural environment affects how you market your product. When Unilever bought Slim-Fast in 2000, it wanted to expand the company’s market that existed outside North America, which accounted for more than 90 percent of its sales at the time. Unilever wanted to increase Slim-Fast’s revenues fivefold by 2003. The company’s strategy was to plug Slim-Fast into its global marketing and distribution system.4 According to Smriti Chand Marketing, “When Slim-Fast was first launched in Germany, its ads used a local celebrity. In the U.K., testimonials for diet aids may not feature celebrities . . . . [Also] in the U.K. banana was the most popular flavour but this flavour is not sold in continental Europe.”5 This demonstrates the cultural effect each country has on a product and how vital it is to adapt to all the countries you export to in order to ensure that consumers love the product. Be aware of local customs and be willing to understand and accommodate any differences that can cause misunderstanding.
17.Local product regulations need to be scrutinized. In order to sell a product in retail stores or elsewhere, some countries require a statement on the product that indicates where it was made. Check with your prospective customers or a logistics specialist to determine if a country-of-origin label (see Chapter 13), for example, is required by law before you export a product to a foreign country.
Summary
It would be smart to determine if the anticipated export sales of your product will outweigh the expense of adapting it to the country’s standards and to project how long will it take to recover the costs. You may find it more realistic, at least initially, to export your products to countries that will accept them as they are. From there, you can always grow and expand from your successes at your own pace. But keep a long-term perspective: being willing to make strategic changes to your product (a crucial attitude) will open doors to many more international markets. The risk is minimal compared to the risk of maintaining the status quo.
Tip It’s crucial for your company to remain what it is (be it German, American, Japanese), but develop an understanding and willingness to accommodate cultural differences that exist. Follow that path, and great success in the export marketplace will come your way.
Now that we’ve spent a good deal of time looking at getting your product ready for export, we’ll shift our attention to exporting a service.
Notes
1. “Bite the Wax Tadpole,” Phil Mooney, Coca-Cola Conversations, last revised March 6, 2008,http://www.coca-colaconversations.com/2008/03/bite-the-wax-ta.html.
2. “To L’Oréal, Brazil’s Women Need New Style of Shopping,” Wall Street Journal, Christina Passariello, last modified January 21, 2011, http://online.wsj.com/news/articles/SB10001424052748703951704576091920875276938.
3. “India, A New Facebook Testing Ground,” Amol Sharma, Wall Street Journal, last modified October 20, 2012,http://online.wsj.com/article/SB10000872396390443749204578048384116646940.html.
4. “Unilever’s Slim-Fast Goes From Juggernaut to Afterthought,” Matthew Boyle, Bloomberg, last modified January 15, 2013,http://www.bloomberg.com/news/2013-01-14/unilever-s-slim-fast-goes-from-juggernaut-to-afterthought.html.
5. “5 Major Product Communications Strategies Used in International Marketing,” Smriti Chand Marketing, YourArticleLibrary.com, accessed October 24, 2013, http://www.yourarticlelibrary.com/marketing-2/5-major-product-communication-strategies-used-in-international-marketing/5834/.