How Can an International Marketing Plan Save You More Than $14000
Most of you reading this, including founders and executives of startup and B2B software companies, have already read an article or post, heard a lecture or were advised on the importance of creating a marketing plan for breaking into international markets.
Despite the broad professional consensus in favor of creating marketing plans, it’s quite surprising to see that there are still small and medium-sized enterprises that do not bother investing in making international marketing plans.
There are various reasons for this:
- The high costs associated with preparing a detailed and professional international marketing plan based on market research.
- The company does not have the experience and knowledge required to draft marketing plans.
- The company does not have the time to invest in preparing such plans.
- The marketing plan is perceived as academic rather than practical.
- Some companies have prepared a business plan for the purpose of raising capital, yet fail to realize that such a document does not come in lieu of an operative marketing plan.
- Lack of awareness as to the financial and business damage of not preparing such a plan.
An international marketing plan is based on market research that includes an analysis of market characteristics and trends, competitor survey, depicting the relevant players and identifying client types. The plan also examines where the business and product currently stand. The plan analyzes the significance of these findings and accordingly outlines marketing goals and the strategies to make them happen, including decisions about target clients, brand positioning, unique selling propositions, the scope of the product on offer, prices, distribution channels, territories in which the company will operate and marketing channels. The plan then describes all actions and the budget required to achieve these goals. The marketing plan is an operative document that also includes strategy and actions that must be taken: who does what, when and how much will it cost us? You can find all the components of an international marketing plan in this link.
An international marketing plan is similar in its layout to any other marketing plan, though there are some differences:
- Market information – Due to the distance from some markets and how diverse they are, there is a lack of information and a high level of uncertainty as to what goes on in them. Also, comprehensively researching each and every potential territory is not a realistic option. Obtaining the most current and relevant information is a complex task.
- International marketing has another dimension: territory. Where are we going to sell? In which countries? In one country or more? Who are the competitors we choose to analyze – international corporations or local businesses?
- In high-tech and B2B software, when dealing with an innovative product, analysis is often required to determine which industry or specific category the product belongs to and who is its target customers – meaning that the market we are about to analyze is not necessarily known in advance.
- The mistakes arising from failure to collect information, unprofessional analysis and erroneous operative decisions – cost a lot more money in international marketing compared to local marketing.
During my work as a B2B marketing consultant, I have come across two types of companies willing to invest in preparing an international marketing plan:
- Startups and companies offering a new product, whose executives are more experienced and understand that breaking into the international market is a complicated and expensive challenge, and they wish to make the right moves by planning, relying on facts rather than guesswork, analyzing findings, formulating a marketing strategy and understanding that the company must work to achieve targets set in advance. These companies want to lower the risk and base their international operations on a well-organized plan rather than impromptu decisions.
- More established companies that have already failed in the past, ventured into the international market without a plan, lost valuable time and money, but did not give up on the dream of going global, and following a period of ‘licking the wounds’ and after regaining financial stability decided to regroup for the big challenge – and this time, to do it right.
This last point demonstrates that often what we fail to comprehend logically turns out to make sense after we have lost money in the process.
The following examples present various scenarios of financial damage resulting from venturing into international markets without research or a marketing plan:
- Choosing the wrong territories:
4 flights a year (2 to each territory – let us assume one to Europe and one to the USA) for several days to meet with potential clients in target markets, including all travel costs (airfare, hotels, transportation, etc.):
2 flights to Europe * 7,500 NIS = 15,000 NIS
2 flights to the USA * 11,000 NIS = 22,000 NIS
Annual total: 37,000 NIS
- Choosing the wrong exhibition (provided this is type of marketing activity is relevant to the product and market being discussed and actually promotes company goals), in a modest booth – the cost of attending the exhibition as a presenter, renting space and ancillary costs for 2 participants (does not include the cost of designing and setting up the booth):
Cost of convention: 20,000 NIS
Flights for 2 participants (let us assume to Europe): 2 * 7,500 NIS = 15,000 NIS
Total: 35,000 NIS
- Choosing the wrong channel partners and distributors – besides the travel costs specified above, the financial damage incurred over a year during which a sales manager spends their time working on a fruitless channel by making phone calls, participating in webinars, preparing demos, doing presales, drafting distribution agreements, conducting negotiations, replying to irrelevant potential clients presented to the company by the distributor, preparing price quotes, and more.
If we assume that only 5 hours a week are spent in vain on working the wrong channels, using a monthly salary of 30,000 NIS for a sales manager, the total annual cost comes out to 36,000 NIS. This is without factoring in the CEO’s time or that of developers who may be involved throughout the sales process and whose salary costs are substantial.
There are even more scenarios, but even if we assume that a business commits just one and a half of the mistakes listed, we have reached an annual cost of over 50,000 NIS.
We should point out that these costs are for only one year and do not include:
- Damages to the company’s image caused by incorrectly entering the market
- The significance of wasting a year in such competitive global markets
- The financial ramifications of conducting company business without a marketing budget
- The costs of choosing casual marketing and advertising channels offered to the company along the way, for which decisions are made without a marketing strategy
Preparing a marketing plan allows your business to develop a broad view of the possibilities, while also referencing relative pros and cons. Preparing a marketing plan, and then implementing it, is the center-point and main source of all marketing and sales operations in general, and in entering international markets specifically. A company that fails to prepare a marketing plan rests its fate, and money, in the hands of lady luck.