Export Ready or Export Aspirational?
Intergenerational Succession is often a time to set a new path for the future. Australian Agribusiness has a strong overseas reputation for quality and safety and the next generation may be keen to explore the opportunities of capitalising on potential export markets. In the following article, Jessica Beard from Next Market discusses what is involved.
EXPORT READY OR EXPORT ASPIRATIONAL?
Time and time again I meet with businesses that are ‘export aspirational’. They believe that supplying an export market will be a silver bullet resulting in higher pricing and bigger profits.
Although it would be great if this was the case, the prime purpose of developing an export capability should be long-term business diversification and the mitigation of risk rather than a quick fix or the search for a cash-cow.
To be successful in entering export markets and maintaining supply, a considered approach and strategy needs to be developed with well planned activities and ongoing support and expertise.
CONSIDERATIONS FOR SUCCESS
Before deciding on an export strategy, there are many factors that need to be considered from the outset, including:
• Buy-in from senior management to ensure a long-term commitment to the financial and time resources necessary in pursuing export opportunities
• Volume capabilities including the ability to increase production to comfortably supply export markets while maintaining current domestic customer needs
• Market analysis to ensure a strong understanding of market access or protocol requirements, market barriers, relatability of a brand and product, customer segmentation, IP protection, labelling requirements and pricing
• Competitor analysis of other international suppliers
BUILDING A STRONG FOUNDATION
A strategy needs to be developed for the approach to export generally as well as particular export target markets. Having a vision to supply any and every country is unachievable for most suppliers and there are always a range of factors or constraints that make some export markets more viable than others.
One of the first steps is to uncover what is realistically achievable, so the business can have a clear vision and path for their export journey. You should start with a general review to define target markets based on a capability and product opportunity. Then develop a clearly defined export strategy that provides detail on a targeted business approach to export, internal business capabilities, market and customer analysis and segmentation, and a realistic timeline for implementation.
DEVELOPING SUCCESSFUL COMMERCIAL ARRANGEMENTS
Many businesses want to jump straight ahead to this point: to commercialise export opportunities. For a lucky few this works but for most, without a solid foundation, they may receive a single opportunistic order with no repeat or ongoing business.
It is important to develop a program which gives the business an opportunity to meet potential customers and gain insights into export markets, so they can build their internal knowledge and capabilities.
This direct international engagement provides market knowledge and intelligence and gives practical insights, experience and the confidence to move forward.
A point that is often overlooked is the value of relationships. Simply meeting a customer once is not sufficient. Although we live in an age where communication through multiple means is simple and diverse, electronic contact alone cannot be relied upon. Many overseas customers place a high level of importance on personal contact. Commercial outcomes can be limited when a business deal is looked at as a transaction rather than a mutual partnership. Ongoing face-to-face engagement is the most effective way to establish a long-term relationship.
Although there may be a significant investment in both time and the cost of travel, personal contact establishes a solid foundation that helps protect a brand and product against cheaper competitors. It can also ensure orders continue even when currency fluctuations become unfavourable.
ESTABLISHING AND MAINTAINING AN AUTHENTIC BRAND
Once supply is established, businesses must engage in programs to support their brand and product. The reason behind this is the target audience need to become familiar with the brand and product and understand the overall value proposition. Essentially why should they buy a particular product over an alternative, especially if its more expensive? The objective is to make the brand and products relatable, trustworthy and authentic to the target audience, so they have a reason to purchase in the first place and continue to purchase thereafter.
To maintain success in export markets, you need to develop a program of activities. This includes, retail marketing campaigns, trade events, consumer activations or food service programs that tell a business’s unique story to the right audience at the right time and location to help achieve brand and product recognition and increased demand.
Without the right activities and a solid relationship, it makes it difficult for importers, retailers, distributors and end-users to understand how and why they should continue to purchase a specific brand or product. It is important to provide a tailored and considered approach from the beginning. The world is becoming a small place. For Australian agri-food and beverage businesses to remain competitive, export is a key consideration.
Dealing with international markets can be confusing and time consuming. Although there are many great opportunities, mistakes can be expensive and disruptive. Limitations in language or cultural expertise can restrict correct positioning and the development of international market presence.
The first step is to understand your product, value proposition and capacity. Seek out professional expertise to assist you to deal with the nuances of current or potential export markets and determine the appropriate approach and strategy.