One of the issues that B2B software companies, which are seeking to market their products in international markets are struggling with, is whether it is advisable to openly and transparently publish the software prices on the company’s website.
There are three approaches:
The first approach holds that prices should not be publicized, fearing that customers would be deterred by the prices even before they make contact with the company as well as in order to prevent exposure of this sensitive information to competitors. In other cases, the companies are interested in adjusting the offer and the price to each customer, and they are required to conduct a process of personalizing the proposal and the correct pricing for each customer.
A second approach, led mainly by software companies selling according to SaaS model, holds that the full pricelist should be publicized on their site since it is an integral part of the SaaS model – this is sometimes without giving it a thought whether this step will be beneficial to them.
Companies that are debating this issue.
The second approach gains much popularity, particularly with companies with a product on the cloud or a sales model of SaaS – and in most cases justifiably.
However, as we have seen, there are also substantial reasons why prices should not be publicized, the most prominent of which is not to provide such sensitive information to competitors.
How does one decide?
To help you make an informed decision on this matter, we propose, as part of your marketing strategy, to consider a set of parameters:
Product complexity and the nature of the sales process
The more the product is associated with the SaaS model, meaning a no touch type sales, the more likely we would desire to publish the price on the site.
Such sales are often related to online marketing in general and inbound marketing in particular. Potential customers reaching the site evaluate the product, including its price and might choose to try the it. If the experience is positive, they will choose, at the end of the trial period, to insert their credit card details and start using the full capabilities of the product. In such cases, the purchase is made online, via the site, so it is natural that the price will be published there – otherwise the sale will not be realized at all.
It is important to know our target customers and their typical purchasing processes. If, indeed, the information about the price is important to the customer in order to make a decision while browsing the site and making an order then perhaps we should provide him with this information. If this question intrigues the customer but is not material to the stage in question, then we may want to avoid discussing the price before we are confident (after talking to the customer) that our value proposition is clear to him and he understands what he will pay for and what he will receive.
On the other hand, if it is a complex or an Enterprise product, which requires on-going manual human involvement of salespersons (whether in the field, in meetings and demonstrations or by an inside sales team) and maybe even involvement of technical roles at the sales stage – it may not be right to do with a simple web price list.
One should be keep in mind that your product may be on the cloud and even priced in a monthly SaaS model, and yet the sale might be more similar to traditional Enterprise sales, which requires deeper understanding of the customer’s needs, a number of meetings or other interactions with various functionaries, special adjustment of the price and even a demand from the vendor to send a formal quotation. This depends of course on your target customers: if it is a bank procurement manager or an IT manager in a hospital who is interested in purchasing a product that has a high total cost, do you see them easily providing the business credit card and making a classic no touch purchase independently? On the other hand, with small and medium-sized companies or hi-tech, start-ups and software companies – this acquisition process is perceived as more natural.
Your pricing complexity may also affect your decision. Pricing should be simple, so that it is easy for the customer to purchase. However, sometimes circumstances do not allow this and require a pricing model based on several dimensions such as the number of users, number of records (such as number of contacts in the CRM system) as well as additions of advanced modules or integrations to third party systems, and more. In these cases, it seems that it will be difficult to present the prices in a simple and light Internet format and more discussion is needed on the aspect of the value before reaching the price issue and “tailoring” the proposal to the customer’s measurements.
The attractiveness of the offer
Another factor to consider is the level of attractiveness of your product and offer. The cheaper you are compared to your competitors, the more logical it is to display it on the site – because you have some advantage. Nevertheless, something substantial has to stand behind this price, because otherwise your competitors will be able to quickly compare and adjust their prices.
In cases where the low price is an integral part of your product, your marketing strategy (as opposed to an arbitrary decision to sell cheaper), the value proposition to your customer, and your Unique Selling Proposition (USP), the feasibility of advertising the price will increase. For illustration purposes, take for example an innovative product that constitutes an alternative to hardware based products such as the traditional firewall and VPN, and which offers a better solution for securing network access. The product is based solely on software, is offered as a Network as a Service and at low prices. In this case, the price is an integral part of the product’s uniqueness (USP) and therefore it would be most likely to be expressed by posting it on the site.
Too expensive? Never mind
What if your prices are nonetheless too expensive and you are afraid to scare away potential customers? In such cases, you should remember:
At times, a high price constitutes a quality indicator for customers, so it is not certain that in terms of positioning this will not be a positive move.
Attaching testimonials of recommending customers on the price page as well as case studies on the site will inform potential customers that there is a return on the price and reduce the perceived risk of purchasing from you.
We are happy to invite you to our next event – Advanced Global Strategy and Smart B2B Marketing Tactics –Joining Forces – which will be held on November 14, 2018 at 9:30 AM at Oracle (Entrance B, 6th floor), 18 Aharon Bart St., Petah Tikva.
In our gathering we will introduce various, sometimes surprising methods for creating competitive advantages that enable successful penetration of international markets.
Our meeting will also include a session about one of the most challenging barriers that B2B companies face in international markets – the lack of customer references, either in the target market or globally.
The purpose of this paper is to encourage entrepreneurs, who are interested in entering a new venture and develop a product in the software field as well as founders and directors in existing software companies, who are coping with rather difficult sales challenges in general and international sales in particular – and show them the bright side.
Some of the following complaints by many software companies may sound familiar to you:
The potential customers show no initial interest in the product
The customer does not understand or makes no effort to understand what the product does, its function in the organization and its benefits.
The customer is trapped in outdated concepts and finds it hard to accept a solution with another or innovative approach.
It is difficult to demonstrate the advantages of a product, which is not physical, until it actually works at the customer’s organization
The customers are wrong to think that the solution capabilities are already integrated into their ERP or into any other existing system in the organization.
The competitors are much larger and so are their marketing budgets
The competitors reduce prices
Absence of references at the target country
The need and the costs of developments and adjustments to a variety of operation systems and to updating versions.
Customers seeking integration into existing systems but are not willing to pay for it.
Repeated requests for carrying out POC or a pilot instead of closing the big and final contract.
The customer conditions the purchase on the company’s opening an office at the country of destination.
All these complaints are valid and should not be underestimated. Handling them is carried out both on the marketing strategy level and on the tactical level combined with various B2B international marketing tactics. However, these will not be discussed in this article.
The purpose of this paper is to show the positive side of companies, entrepreneurs and directors engaging in software products, as opposed to companies with physical and tangible products. While companies with tangible products still suffer from some of the aforementioned difficulties, there are still additional difficulties and restrictions affecting directly or indirectly the sales process, which the software companies are not familiar with.
Inventory. Companies manufacturing physical products always have a major concern: the inventory issue. Manufacturing their products for inventory, to promote anticipated demand costs a lot of money. Alternatively, if one manufactures only on an order basis, then the manufacturing and delivery to the end-customer may take too long – and the customers may not agree to wait and consequently will not order. Furthermore, companies of physical products are required to maintain warehouses and run them, including storage facilities, special equipment and even complex designated software for warehouse management. In addition, there is constant concern of thefts – both in the company itself and at the transportation stage. Software companies know nothing about inventory, storage and theft of products and are free of this concern.
Logistics – Physical products must be transported: from the company to the port, from there to the port of the target market and from there to the distribution centers or to the end-customer. This requires a lot of handling, designated personnel and many expenses related to logistics. Among others, negotiation with the customer or the distributor on the terms of sale is required, where the product will be supplied (for instance, ex works), who is responsible for the transportation and the product and from which stage, insurances, engagement with the shipping companies, customs etc. This is a “headache” that software companies are not familiar with. All this compared to a simple login in a SaaS based product or remote installation on a local server – this is the major “logistics” in software companies.
Product returns – Managers of physical products companies have an additional “nightmare” – the return of products by customers or distributors. If the product is defective or the customer is not satisfied, he may return it and not pay for it or demand its replacement. This means heavy financial damage to the company, since a physical product has variable production costs, which in case of product return, will never be covered.
Payment – The method of payment is very sensitive and risky in companies of physical products. On the one hand, the manufacturer desires to receive payment in advance, since it has manufactured a product with a certain cost and cannot risk the product reaching the customer without paying for it. Furthermore, when the customer is overseas, collection difficulties are even bigger. On the other hand, the customer fears, certainly if it concerns international trade, that if it pays in advance, the product will not be shipped to it, particularly when the supplier is unknown or new. For this purpose, complex mechanisms for international payments have been developed, such as documentary credit and more. In fact, payment to software companies is also a sensitive and not straightforward issue, however if the customer did not pay there is generally no direct damage of loss of production cost and raw materials that have been purchased. In addition, a software company may, in cases where the customer has not paid in advance, not extend the license validity or even block access to the account on the cloud. The collection issue is by far easier in software products.
To sell what yet does not exist. In a physical product, what is generally sold is a product in its existing version. Product improvements take time and a customer will not be easily temped to believe promises that the product he will receive in fact will exceed the one presented to him at the time of sale. On the other hand, in software, within reasonable limits of course, one may suggest, already at the sales stage, higher functionalities and capabilities than the existing one assuming that a new version is already under development or that within a short time it will be possible to bridge the gap and complete the required developments. In sales of software, it is easier to harness the product’s road map to the present sale.
Flexibility in prices. Companies with physical products can hardly reduce the product price under its manufacturing cost since this will lead to immediate loss. Too big price reduction or even delivering products for free is not necessarily a desirable practice in the long run, though sometime there is need for it at the penetration stages to a new market or a first agreement with a big customer. In such cases, the software companies have a greater flexibility to offer a product at cheap prices or even for free, whether for a trial period or at a limited number of licenses or an edition with limited functionalities. Freemium models are acceptable in the software field and there are diverse methods for transferring to a payment model after the customer has experienced the product. The damage at the bottom line is minimal compared to a physical product that is supplied for free and in fact, the entire business model of a software company, and certainly those in the SaaS model, may rely on this sales method. This does not exist in physical products where there is a marginal cost for the manufacturing of each unit.
Product trials. What could be better than convincing a customer to purchase an excellent product than to experience it? In sales of physical products, the only way to see the product or to experience it is to go to the shop (particularly in sales of consumer products), wait for the sales representative to arrive and show the product or send a sample via a courier or some transport service. In software, the product may be presented and accessed on a computer, whether by remote installation performed by the company, by the user himself or by logging in to a web system. This, without shipments, logistics and waiting time. In addition, there is no distance between the advertising media, where the customer was exposed to the product and the product consumption media – both will generally be on the computer monitor, a tablet or a mobile phone. In software, the distance between the product advertising, experiencing it and even buying it – is sometime measured by single clicks.
Support – With physical products, ensuring local support factors at the target market and shipment of spare parts are an operation in itself, which requires setting up a local support infrastructure. In software, even if there are many cases in which the customer prefers local support at the target market provided by a local staff speaking the customer’s language, at least technically, there is a possibility, in most cases, of providing support remotely by company staff, which knows better than any local support partner the product and how to respond to malfunctions without the need to travel to the customer.
Outsourcing – Software companies can contract and outsource relatively easily the development services of software development companies, in order to reinforce their development capabilities or meet schedules. This is a method, which enables greater flexibility (there is no need to recruit or dismiss employees) as well as to maintain the lean workforce structure. All this compared to manufacturing plants, where increasing the manufacturing capacity means money investment and waiting for new employee recruitment and their training or new machines and manufacturing lines, which by the time these enter the manufacturing, the nature of the demand may change.
Open Code. Software companies may receive almost for free open code software components, instead of developing them by themselves. In physical products, such an “arrangement” does not exist and it is not possible to obtain free “raw materials”.
Conducting business in English. Quite often, in software companies, the contact during the sale stage is with IT, technology and innovation departments. With these bodies, even if this is not the ideal scenario, it is possible in many cases to communicate in English, and there is no absolute necessity to have a command of the local language. This opens many options to begin sale and demonstration processes compared to many other physical products, which are of a lower innovation level and the decision-makers are less likely to be fluent in the English language.
Quality human capital – which is not obvious and is benefited by software companies.
It is clear that also your competitors, other software companies, benefit from all these advantages however it is nonetheless encouraging to acknowledge from time to time the fact that you have chosen the right field.
As someone who has worked with and in companies of physical products, I can only conclude that the software companies are relatively living in a business paradise, worth appreciating.
Would you like to add your suggestions to more advantages of software companies? We will be glad to hear your opinion.
Exhibitions and conferences have been, and surprisingly are still one of the common B2B marketing channels
CEBIT 2018 changes format and turns into a stage for innovation in the field of information security as well. This year, the exhibition moved to the month of June and is held in a new format, turning into a huge festival of digital innovation. Accordingly, the security zone will be particularly large.
What some the Israeli companies do not know is that the exhibition has a representation in Israel called Hannover Fairs Center representative in Israel (Deutche Messe, Hanover, Germany). It is possible to address them here in Israel, to speak in Hebrew and receive information and any required assistance regarding possible participation and preparation for the exhibition.
I am enclosing a link to a report published on the issue with additional details on CEBIT.
A common phenomenon I encounter in my work meetings with B2B software companies and startups is the frustration of founders, CEOs and sales managers that although they have an excellent product it is very difficult to sell it overseas.
The frustration from this situation is particularly big when it concerns a product that has succeeded in the local market in Israel, so there is no doubt about the usefulness of the solution, its rich functionality and the company’s delivery capabilities. Somehow, when turning to international sales everything becomes more difficult.
First, one should not be surprised that the sales overseas are difficult. This fact is well known and I do not know one company that had no difficulties during the penetration process to international markets.
Known difficulties in international marketing of startups and B2B software companies include:
Absence of existing customer basis as references in international markets
Distance from the market and the customers, and the absence of established sales infrastructure in the target country – neither an office nor local sales staff. This situation is completely different from the activity that existed in the Israeli market.
Great international competitors – you may not have met them yet in Israel, but in the international markets you may meet them and you will have to deal with them and with their broad and rich solutions, their impressive references and with their marketing budgets, which are bigger than yours.
Local competitors – of which you have not yet heard, since their activity is local at your target country, but they have excellent solutions, adjusted to the customers and the local business environment and standards and they are backed up by a local implementation and support team.
Need for industry specialization – in technological or complex products and particularly in the B2B field, professional expertise is required exceeding the boundaries of the product and the technology but relating more to professional acquaintance with the industry and best practices.
Handling and fostering business partners – in cases in which we choose to operate by means of distributors, this distribution channel must be fostered and invested in: training, conference calls, meeting, preparation of marketing materials and sales tools, price lists, quotation templates, agreements and more.
Globalization versus localization – dealing with the dilemma whether to go out to overseas markets with unified products, price policy and branding and the need to invest and carry out local adjustments to the various markets.
Companies, startups and entrepreneurs less experienced in international marketing, which are trying their luck overseas, operate under the wrong assumption that a good product is enough. They believe that if the product is excellent, and even exceeds that of the competitors, the road to successes is paved.
Among the reasons for the decisive advantage of an excellent product, which I encounter, the following points arise:
The product is unique – there are no such products on the market
The product is richer in functionality
The product is technologically more advanced
The product has similar functionality but is much cheaper
Accordingly, they believe that it is enough to spread the word about the product to the customers and they will immediately stand in line to purchase it. However, reality shows a completely different customer behavior.
To the best of my understanding, this assumption stems from two interrelated reasons:
The one is the technical/product background of the entrepreneurs – which is very dominant in B2B software companies. The entrepreneurs’ view is very technical and logical: if the product is better than other products, then the customers will run to buy it, and all that is remains is to be, perhaps, a little more flexible with the price.
Ignoring the customer’s world, environment and point of view. According to this approach, the customer is focused on examining the company’s solution and the only decisions he may make are:
He is interested in purchasing the product and desires to make progress in the buying process;
He is interested in purchasing the product, but he does not have the budget;
He is not interested in purchasing the product.
This approach ignores all the marketing challenges in general and the international marketing in particular:
Mostly, your product is not unique and there are others similar to it. The reasons why entrepreneurs do not know this are:
The focus, which has been so far on the local Israeli market, where not many of the international competitors are active (due to other territories priorities, the market size and language difficulties)
Failure to conduct a market research. If an orderly process of market research had been conducted, as part of forming the company’s marketing strategy, they would have surely detected the major competitors.
Even if the product is rather unique in its functionality, there are competitors who solve a similar problem by means of another solution and software.
In most cases, customers do not purchase the product in order to be advanced. They are looking for a much clearer and more tangible value. For the most part, this value will move around reducing costs, achieving a competitive advantage and reducing risk to the customer.
Even if the competitors do not solve at all the problem, which your solution solves, or do not create a competitive advantage for the customer, which your solution provides, there are other pains, not less important, that they do solve.
In order to clarify the last point, let us take for example a company, which sells software in the Martech field, and let us assume for the purpose of the example, a tool for building and designing excellent landing pages. When approaching with the solution the CMO or the relevant decision makers at the marketing department in order to suggest the solution, in fact the picture these customers see and experience is similar to this:
Endless marketing solutions
This is in fact the market ecosystem of all the solutions, tools, systems and platforms in the marketing area. Countless suppliers, solutions and tools. Each one is good in its field and each contributes a different benefit or solves a different problem the customer may have. Most of them are not direct competitors of our company but almost all of them try to reach those same decision makers, to create an interest and “steal” their time. All of them try to present their products, their benefits, their ROI or the competitive advantage they grant their customers.
In this context, they are definitely competing with our landing page building company. They compete for the time of the decision makers and their attention as well as for the budget – since we do not expect the CMO to purchase hundreds of products.
If so, why should the customer bother to take interest particularly in your products and at the end, also take a risk and purchase them (particularly if the company has no references)?
Does it sound discouraging? Not necessarily. One must simply be familiar with the customer’s world and then he will be more prepared. So how does one get out of this situation? Exactly for this, a marketing strategy is essential.
We will not be able to expand this complex area in this article; however, we can point out in short that a marketing strategy assists in several ways:
By the mere fact that it is required to rely on a market research and rises the level of our knowledge about the various players and competitors operating in the market.
It forces us to focus on a certain type of customers, for instance according to vertical, size, standardization related to the industry or other parameters. When selecting the type of customers most suitable for your solution (i.e., those who will derive maximum benefit from it), then it is possible to be more specific in the messages conveyed to the customers. It is possible to better prepare for their world, and demonstrate professionalism in understanding their pains and therefore be more relevant than the other dozens or hundreds of vendors assembling at their door.
Once we have defined very accurately who our target customers are, then it is possible to define the Unique Selling Proposition (USP) – a definition, which responds exactly to the question why the customer should bother and take the risk to purchase a product from an unknown company – a definition, which connects directly between your product and the needs of your specific target audience.
Today we host an article by Mersad Berberovic from Leadpath:
What are the best marketing automation tools for today’s small to medium businesses?
If you are going to operate competitively, and stand a chance to survive and thrive in this economic environment, you’ve got to have automation. This is especially true when it comes to marketing. So, what are the top tools for entrepreneurs, startups, and SMBs?
What Marketing Automation Can Do
What is marketing automation really, what can it do for your venture?
Winning in business today is all about efficiency. Even small businesses and entrepreneurs now have a great opportunity to compete, if they can operate efficiently enough. That means being able to run a lean business, maximize the potential of the marketing budget, and scale faster.
Specifically, marketing automation can help in these areas, according to the world’s largest outsourcing portal, Upwork.com.
Customer relationship management
According to Small Biz Trends and the Email Marketing & Marketing Automation Excellence 2017 Report, these are six of the main categories in which technology driven techniques are being applied.
Email and customer onboarding
Profile based targeting
Personalization through content marketing
Targeted marketing broadcasts
Here are seven of the top marketing automation tools available to SMBs now.
Google Attribution is one of the marketing giant’s latest tools. It helps B2B and B2C marketers make sense of which of their marketing channels and efforts are really producing results. Without tools like these, business owners often really have no idea what is working, nor have an effective way of tracking marketing ROI.
Direct to voicemail or ringless voicemail drops have emerged as one of the best tools for reaching prospects and clients in mass. This can be as part of customer service and loyalty programs, as well as for prospecting at scale, and generating hot inbound lead calls. The incredible savings on time and labor this can produce means that business can spend far more time generating real revenue than wasting time on the phone. It also happens to be one of the most effective direct response marketing methods that are still available to organizations of all sizes, from startup to Inc. 500 companies.
WordPress continues to be one of the most widely used website platforms and CRM tools in the world. In fact, it has almost 60% of the global market share in the CMS space. Almost 30% of the entire internet runs on WordPress. So, it works. There are more complicated options out there, but most don’t need the features. WordPress also makes it easy for marketing teams to create, collaborate on, and schedule marketing content, and even social. A huge variety of plug-ins can enable automated payments for subscriptions and sales through WP, and even affiliate marketing programs.
Mailchimp is an affordable and easy to use email marketing automation tool. There are many similar tools such as AWeber, Get Response, and InfusionSoft. Most have very similar features and capabilities for automating follow up, list building, autoresponder series, and even popup ads and forms. However, where Mailchimp stands out for many is its low cost, free trials, simplicity in designing and sending email, and the wide variety of integrations with other services, like WordPress and Instapage.
Canva may not be as much of an automation tool as the others on this list, yet it does offer a lot to help streamline marketing efforts. Canva is primarily an image creation tool. It can be used to create image content for ads, blogs, and social media. You can even use it to create presentations, mini-websites, and slideshows. Perhaps more importantly for automation, it makes it easy for creative teams to collaborate on design, and for creating templates, and ensuring branding stays consistent across all marketing collateral.
One of the biggest time drags that small businesses face is publishing social media content. It is vital for most enterprises. Yet, there are so many platforms, and so much content to publish, that it can be a huge time drain, with a very poor ROI per hour. Assistants can help, but also often end up creating fragmented and unreliable processes, with underperforming results. Hoootsuite is a social media marketing management dashboard. With a little copy and pasting and a few clicks a month worth of content be scheduled out and automated.
Bulk SMS & Text Message Marketing
Like ringless voicemail marketing, bulk text and SMS is a powerful tool for automating marketing efforts. It can be used to reach thousands of prospects and customers in minutes, and to generate inbound leads, website visitors, and calls, at a fraction of the cost of most other mediums. It can be scheduled in advance, with custom, and consistent messaging. On the backend it means only needing to spend labor hours on conversing with live and interested sales prospects; enhancing productivity and revenue potential, while keeping down costs.
Marketing automation is crucial for small businesses to stay alive and grow, and for medium and larger businesses to keep growing and stay competitive. There more that is automated, the more that can be achieved. The above seven resources offer a variety of tools which can improve productivity and profitability in marketing, and other areas of business.
We are happy to invite you to our next event – The B2B Marketing Olympics – Unlocking the Secrets of Local Markets – which will be held on May 9, 2018 at 9:30 AM at Google Campus Tel Aviv, Electra Tower (Ampa Tower), 34th floor.
One of the most challenging aspects of global marketing is selecting the territories in which to market the products. It is a particularly interesting question in B2B software and other technological products, which are either digital entities, sometimes cloud-based services, requiring no physical distribution and logistics, or IT products that could be used by any business worldwide. In our gathering, we will outline a process and methodology for selecting the territories on which to focus your international marketing efforts.
Among the most popular markets that Israeli companies increasingly target are the USA, Germany, China, Japan and lately Colombia – representing multiple continents. Which is the one your company should focus on? One of the parameters that should be considered is the local business culture of any given market – often difficult to understand, and confusing for both beginners and more experienced marketers.
Therefore, we have organized the “B2B Marketing Olympics” with powerful “delegates” – experienced experts in these 5 territories, each with a unique background – who will “represent” his territory and share his insights, secrets and tips regarding the local business culture and how to play by the local rules, with the aim of helping you determine if you are prepared to conduct business in this market and if so, how to make it successful.
For more details, the agenda and registration click here
Geektime published a survey listing the main reasons startups fail.
Quickly glancing at the survey shows that “bad marketing” is responsible for only 15% of cases, while looking at the other reasons in-depth (% of respondents who listed a specific reason) reveals a much more worrying picture:
“We built a product and searched for a problem” (42%) – This is very common among Israeli startups, which have advanced technological skills but a lack of vision when it comes to identifying target customers and what problem the product solves or what clear advantage the product offers.
“We ignored user feedback” (14%) – Client feedback is crucial for improving the product. The product’s definition and content are an inseparable part of the international marketing mix.
“We have a product, now we need to find a business model” (17%) – A marketing plan defines, among other things, the business model to be used to bring value to the client. This is a marketing problem.
“We had issues with pricing” (18%) – Pricing is part of the marketing plan. When you understand the market, your clients’ needs and competitors – you can properly price your products.
“Our competitors did a better job than us” (19%) – Had they checked who their competitors are beforehand, they could have aimed their product at certain clients or functionalities not covered by competitors. This is part of market research and establishing a unique selling proposition.
If we add up all of these reasons we can see that failing to properly market the product is the main reason startups fail.
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.
B2B startups, and even more established companies, that develop innovative products are very focused on the product and its development. These companies have invested all of their capital, time and efforts into developing and improving the product. When they face difficulties entering international markets, they don’t seem to understand why it’s so hard to sell a product that is better than the competition, and why clients don’t simply realize it and just buy the product or at least start a pilot. Their frustration leads them to wrongfully assume that either the product is not good enough or, worse still, that the clients aren’t good enough.
One of the reasons this happens is that company executives have a superficial view of the market. Their approach sees an innovative product with clear advantages on the one hand and potential clients that might be interested in buying it on the other. Best case scenario, these companies also realize that they have several competitors (unlike a not insignificant number of executives who argue that “we have no competitors”) – with less inferior, less innovative or much more expensive solutions, so they believe. Oftentimes, since these companies have such innovative products, they don’t even bother defining and evaluating market properties or client environments. Their persistent focus on the product and its clear advantages blinds them from looking at the entire environment to which their potential clients are exposed.
This is especially true of innovative, breakthrough software (in its approach, business model, functionality, user interface, etc.). Many of these companies don’t even know what their market is and to which product category their product belongs just because they focus so much on the product itself. As a result, they don’t bother properly defining their product to the client and certainly not to investors and distributors. Their lack of understanding of the competitive environment means that the product is often defined under the wrong market sector and category. This causes confusion and misunderstandings with clients. The company finds itself attempting to sell a solution while completely disregarding the client’s environment and the myriad of solutions in its specific market sector. This leads them to be encapsulated in a virtual reality where only their product, and maybe that of one or two competitors, is all the client has to choose from. These companies then have a very hard time briefly explaining to potential clients and distributors what their product does and which marketing / distribution / sales channels are accepted for products in their category. Imagine a boxer who takes a wrong turn and instead of making it to the boxing ring he finds himself on a tennis court, desperately trying to explain to the crowd and referee what he’s doing there.
Market mapping is a process undertaken as part of market research and when establishing marketing strategies and drafting an international marketing plan, during which the category or market sector of the developed product is evaluated and the active players are identified. When we say “players” we mean that there are other entities in the market that don’t compete with said product directly. There are various types of players in the market, but one of these types is vendors with similar, comparable, alternative, broader (product suites that contain a solution that directly competes with that of the company) or narrower solutions.
I recently worked with a client, a B2B software company, that developed a unique product, or so they said, that automatically adapts ads in marketing campaigns. The product was indeed unique in terms of functionality and approach – so unique, in fact, that the company didn’t try to categorize it and when they did it was wrongfully categorized under Campaign Management, which is a category generally used for other types of products. The technical solution was unique, but the problem it solved and its benefits were not. Only after identifying the correct category, Brand Management, did the company realize it had many fierce competitors in the market – which forced them to take on a totally different marketing approach.
Here is a partial example of market mapping:
This image maps out the players in the digital workplace and marketing technology sector. These are various software vendors and solutions for working and sharing in a digital web environment – mostly for marketing purposes. Anyone selling digital workplace or marketing technology software overseas should familiarize themselves with this map – or, alternatively, create one of their own and understand where they sit and which vendors and solutions are comparable or complementary and which compete with them directly.
Such market mapping, although incomplete since there are other types of players besides those vendors not included, enables us:
To understand our arena – in which market sector we are competing. When we know our market, we can evaluate its properties, trends and types of active clients. It allows us to understand what marketing channels our clients are exposed to, which distribution channels they use to buy products from, which conferences they attend, who are their opinion leaders and influencers, and more. Instead of taking a year to find out where your product belongs, you can actively start scouting the market and identify the relevant sector quickly and effectively and use that to promote your products.
Get acquainted with other players that are not competitors – doing so broadens our view of the market and maps out all players with similar products with which you can cooperate to market yours: whether by expanding their product suite by introducing your product, complementing their solutions to offer a more comprehensive solution to the client or even contacting one of their distributors to distribute your products.
Know your clients even better. Clients are exposed to many different products, not just yours. Even if they aren’t your direct competitors, you compete with them over the client’s budget and priorities. A more realistic perspective of the market is critical for managing international sales in a much smarter manner and reaching clients with a more effective message.