Market Opportunities in Surprising Places

The last time Brazil played in the final World Cup football matches, there was a surge of large flat screen television sales in Brazilian cities. That shouldn't surprise any marketer. What was surprising was who was buying them. The urban poor living in favelas (shantytowns) of major cities were the main consumers of these high-end consumer products. But how is that possible? Groups of neighbors pooled their money together to buy one TV for several families.

Those business professionals trained in industrialized countries often look for similar market characteristics when we expand our companies into overseas markets. If I sell cars to a certain segment of the domestic market, I look for the same segment in overseas markets. That may initially lead me to markets in Canada, Japan, and the European Union.

Entrepreneurs always need to think smarter than their larger competitors in order to survive and to thrive. One market opportunity that should not be overlooked is the possibility of selling into lower income markets overseas.

Wait a minute - with limited resources I should try selling my product into markets with LESS disposable income? Depending on circumstances, yes. I'm a big fan of C.K. Prahalad, who has researched and written extensively on serving the world's poor without sacrificing profits.

Here are some reasons why:

Group Buying Power
Many cultures are more collectivist and may be comfortable buying as a group of neighbors or as a village. This pools together buying power, like the favela flat screens. In China, families often pool several incomes together to buy the highest status car that the family can afford.

Gotta Have It Products
Cultural values can affect buying behavior. China's one-child policy has created families where one child is supported often by two working parents and up to four working grandparents. That child's future, especially through education, is the entire family's priority. Any product or service that helps to improve a child's academic performance even slightly would be very marketable in China regardless of the country's lower GDP per capita.

Repackaging Can Be the Answer
In my culture (U.S.), buying products in bulk is practically a sport. The reasoning is that the bigger the package, the better the value. In most other countries, products are sold in smaller quantities. Instead of a package of 10 men's razors, a consumer would buy just one razor at a time. Instead of buying a computer, a consumer might pay per use at a computer kiosk near their home.

According to Dr. Prahalad in his HBR (9/02) article, there are approximately 100 million people on the planet with annual income over $20,000. There are 2 billion people with income of $2,000-20,000 and another 4 billion with incomes under $2,000. Is your product or service one that could be altered to profitably serve the majority of the world's consumers?

If you have questions about overseas marketing strategies, including how to sell into developing countries, please send me an email: intl.entrepreneur@gmail.com

Think you know American values?

I took a course last year on Cross-Cultural Management from Dr. Kang-Rae Cho at the University of Colorado Denver. It covered all the theories on cross-cultural studies from Hofstede, Trompenaars, Farmer-Richmond etc. But what I found most interesting was the following description of mainstream American cultural values. Like most readers of this blog, my focus is outward towards the rest of the world and not closely examining my fellow Americans. I've also lived outside the country, so I thought I would have known all of these traits. There were a few surprises.

Quick note: as with all cultural descriptions these are generalizations and all traits to not necessarily apply to all Americans and may be more or less pronounced in specific regions of the country:

Mainstream American Cultural Traits
(per Dr. Kang-Rae Cho)

1. A high value on "Material well-being". For some, this can also be materialism.

2. 2-fold judgement based on principle. Think of our Presidential elections and political parties

3. Tendency of moralizing. Americans know what I'm talking about.

4. Distinction between "work" and "play"

5. Special attitude towards time. "Time is money." "Time management", etc.

6. High value on Individual Efforts and Optimism.

7. High value on Individualism and Individual Freedom.

8. When it's man vs. nature, man wins

9. Avoid uncertainty through legal process (courts, contracts, etc.) and goal setting

10. Egalitarianism and Fairness

11. Importance of "belonging" - membership

12. Humanitarianism and generosity

13. Nationalistic and patriotic

14. Religiousity (very religious)

I'll be interested in reading your comments!! - Becky

Can you be TOO culturally intelligent?

I recently read an article that has got me thinking - is it possible to be too culturally sensitive? Author Dr. Bob March describes his friend who had learned Japanese language and customs so well that he actually offended his Japanese counterparts by acting too Japanese. Here's the article: http://www.negotiations.com/articles/appropriate-behaviour/

This has happened to me too. I was an exchange student 20 years ago from the U.S. to a village near Nijmegen in the Netherlands and still regularly speak Dutch (with a little Nijmegese accent) with friends both in the Netherlands and also in Denver where I now live.

Dutch (and Flemish) people are often grateful when a foreign visitor learns even a word or two in their language, and even more so when someone has taken the time to become fluent. But perhaps people have gotten too comfortable with my language that they've categorized me as in some way as Dutch. So... when I can't quite think of a word or mix up grammar a little, the person often looks at me like something's not quite right.

There's a Dutch group that meets in Denver. It's a great group of people, who mark major Dutch holidays together (Queen's Day, Sinterklaas, etc.) along with showing Dutch films and eating Indonesian food. I've participated many times in the past 4 years and enjoyed the group's company. But there's always a little hesitation by certain group members to say - you're not really Dutch, are you? No matter how much I know about the Dutch culture, it's never quite enough for some I think to feel comfortable with me.

So now that you know my perspective on this topic, I'd be very interested to hear about other people's experiences after cultural immersion. And... is there such a thing as being TOO culturally intelligent?

The Time for Global Has Come! Entrepreneurs: Go Forth and Internationalize

Elhadji Koumama has a silver jewelry-making business in Agadez, Niger (Africa). He is a 26th generation Tuareg tribe metalworker. Elhadji has a 3rd grade formal education, but has learned to speak 5 languages and sells jewelry in Africa, Europe, the U.S., and everywhere using e-commerce on his website (www.tuaregjewelry.com). His business has many challenges – civil war, poor infrastructure, corruption, and lack of capital. Yet despite obstacles, the business grows and sustains his extended family and many neighbors in one of the poorest countries in the world.

I met Elhadji in 2007 when he came to Denver for a trade show. He is intelligent and introspective, with tremendous presence. Whenever I think of opportunity for entrepreneurs in global markets, I think of Elhadji. Global markets used to be only for large companies with deep financial reserves. With the advent of (1) the Internet, (2) lower communications costs, (3) lower transportation costs and (4) fewer trade barriers, the time has come for more entrepreneurs to reap the rewards of international trade.

I know. You’re an entrepreneur focused on developing products, closing deals and paying bills. Why spend resources expanding globally early in your company’s timeline?

Externally-Derived Competitive Advantages

The old-school-large-corporation approach to internationalization is to wait until you’ve saturated the domestic market, then use domestic earnings to expand overseas. The company increases market capacity by leveraging internally-derived competitive advantages (product differentiation, etc.).

Entrepreneurs: expanded market capacity is only a small bite of the internationalization cake! We know most entrepreneurs take innovative approaches to business and solve problems creatively. When these traits are applied to international markets, entrepreneurial companies can create multiplier effects.

Some examples:

New Funding Sources. As funding sources including small business loans dried up in economies hit by the recent financial crisis, capital can flow more readily in other countries. Colorado-based Wheelabrator Group went with a Polish private equity firm in their last round of funding.

Market Access and Add-On Product Sales through Partnerships. The right overseas partnership can create competitive advantages. Not only can you gain access to a partner’s clients, but a compatible offering can enhance your own product line in your home market. A Swiss machining firm could partner with a North American machining firm with compatible abilities. Each refers work to the other when the client has an order fitting the partner’s capabilities. Since machining companies rarely have overseas operations, this partnership would be a competitive advantage in serving large manufacturing companies that operate in both Europe and North America.

Reduced Business Risk. Wait a minute – isn’t going global going to increase my company’s risk? If you set up your operations right, then risk can actually decrease. Here are some reasons why: (1) Economic conditions affect different parts of the world at different times. The current financial crisis that bankrupted Iceland left Latin America virtually untouched. It’s like having a balanced financial portfolio. (2) Take a larger share of markets where competition is less. New York City chocolatier, Alison Nelson just expanded her Chocolate Bar stores into the Middle East. In Arab countries she faces very little competition and a growing market. (3) Many international business risks can be mitigated through insurance and locking in currency rates.

If you’d like to learn more about how international expansion could help your growing company become globally competitive, please contact me at intl.entrepreneur@gmail.com and follow my blog at http://intlentreprenr.blogspot.com.

Becky DeStigter
International Entrepreneur

Learning from expected sources

Back when I was young and thought I knew everything, I became an exchange student and was sent to the Netherlands. I had been in country for about 3 weeks struggling to learn Dutch when my host family took me to a party at the house of an aunt and uncle. There was plenty of conversation, but I couldn't understand any of it (too fast, too many big words).

Then I met Aimee. He was 25 years old and mentally disabled. He spoke slowly with a simple vocabulary - the only person I could understand! So I followed Aimee around the party for two hours like a puppy dog, asking him lots of questions like "what is this?" "how do you say that?"

As I sat in the car driving away from the party, I realized the importance of this lesson. And whenever I get smug about smart, I remember that there is something to learn from everyone I meet. I helps me to keep learning (hopefully!) every day.

Why I write about International Entrepreneurs...

International entrepreneurship is my passion.

Entrepreneurship (wherever it occurs) is a powerful idea that anyone with skills and a lot of hard work can create their own livelihood and financially support themselves. To me, entrepreneurs represent empowerment, initiative, innovation, and life-long learning. As a working woman, entrepreneurship means that when my gender has kept me from rising in an organization, I can build my own company and write my own rules.

I started studying international entrepreneurs two years ago at the University of Colorado Denver. Dr. Manuel Serapio teaches the course on International Entrepreneurship and is one of the top academics in this field. We studied born-global companies, companies that profitably serve the world's developing countries, and international social entrepreneurship. For those in the U.S. who may not know, American exports have outpaced economic growth by about 5 fold recently. Companies are internationalizing at much earlier stages in their development. And entrepreneurs are leveraging competitive advantages from their overseas partners instead of relying solely on internally-derived advantages.

I'm starting this blog in hopes of sharing some of things I'm learning from my consulting and classes. My hope is to create new relationships with contacts in the U.S. and other countries that we may be able to refer each other business opportunities. I'm also hoping to connect with those people who want to tackle the challenges of doing business internationally so that we can exchange ideas.

A little more about me... my name is Becky Park DeStigter and live in Colorado, U.S.A. I have a consulting practice for helping entrepreneurs be more globally competitive. I also work part-time for the Institute for International Business at the University of Colorado Denver serving as business outreach to Colorado companies. I am pursuing two Masters degrees - an MBA and an MS in International Business. I'm married, and have two school-aged children and a golden retriever. I was an exchange student to the Netherlands and still speak Dutch. In addition, I also speak Spanish & German, although they're like a muscle needing exercise. I've learned a little Italian, Tagalog and Chinese, too. For fun, my family likes to alpine ski, cross country ski, hike, travel, and watch sports. I volunteer as a Girl Scout leader and AFS exchange student liaison. My hometown is Appleton, Wisconsin, which for anyone from outside the U.S. is between Chicago and Canada.