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Country Segmentation: One Size Does Not Fit All

By: Greg Seminara, Export Solutions

Strategic segmentation of export opportunities is “Job One” for export managers. Export Solutions divides countries into three groups: Strategic, Priority, and Opportunistic. This approach filters countries by “size of the prize” and investments required to win. The basic rationale is that a company should allocate different resources to develop a large country like Brazil, compared to a medium size country like Belgium versus the Bahamas or Bermuda. Too frequently, we see companies handcuff all markets to one export program, with common strategy, pricing, and invest models for all countries.

Segmentation Factors
Segmentation analytics will vary by company. Absolute population is just one factor warranting consideration. Other criteria include size of the category, proximity to your producing plant, as well as per capita spending power. For example, most USAbased exporters sell far more to Puerto Rico, an island with 4 million people, than they do to China or Brazil. As a result, some USAbrand owners place a strategic focus on the Caribbean Basin countries adjacent to the USAand process only occasional opportunistic shipments to complex countries such as China.

Mix of Countries
Most companies can dedicate focus on a strategic launch into only one or two “strategic” countries at a time. It’s appropriate to create a growth plan aimed at a mix of Strategic, Priority, and Opportunistic countries.

Market Share Expectations
Your export road map should also be adjusted based upon your market share expectations for a select market. Generally, there are three scenarios for a brand to pursue.

Leader: Brand investment and innovation to become #1 in the category.

>Player: Brand plans to compete effectively, obtaining a market share of 5% -20%.

Participant: Niche. Brand offers unique item or product range. Incremental shipments with limited/no investment.

Lessons Learned
Calibrate expectations to investments in brand support and management oversight. Everyone wants to be a category leader or player. To achieve this lofty status, you need to conduct local market research, innovate, maintain competitive pricing, invest in marketing, and align with a strong sales team just as you do in your home market. Projects fail as certain brands want category leadership but invest only to “niche” levels.