Management & Strategy

Product Strategies for Overseas Markets

Businesses selling into overseas markets need to do their research: even if the demand exists, tweaking branding, positioning and details of the product itself could make the difference between success and failure

There's no one-size-fits-all approach to selling into foreign markets, even though we live in an age of globalised trading. Walk into an office in Indonesia and you’ll find Windows on the computers and Coca-Cola in the vending machines. Stroll through a mall in Dubai and you’ll see the same brands as in Leeds or London. All of this can foster the impression that tapping into the growth potential of an overseas market is simply a matter of taking a product that has done well domestically and selling it largely unchanged to buyers elsewhere in the world.
But, of course, it isn’t that simple. In the real world, each national market will have its own particular characteristics. The branding, advertising, marketing positioning and price point that define a product in the UK won’t necessarily deliver customers elsewhere in the world. As such, it's vital that businesses with international ambitions take account of culture, customer expectations and economic conditions when they move into overseas markets.

In some cases, the contrast between an overseas market and that of the UK can be stark. Let’s take the example of the humble biscuit. In the UK, we tend to buy our biscuits in large packets from supermarkets or convenience stores. Jump a few thousand miles to Lagos and biscuits are often sold by street traders servicing drivers caught in the city’s notorious rush-hour traffic jams. Thus, when McVitie's launched in Nigeria, the company adapted its products to the local market, selling its flagship treats in smaller (affordable) packs that could be easily displayed by traders. In other words, the core product stayed more or less the same but its positioning, distribution and packaging were altered for the local market.

To be successful in an overseas market you may – to a greater or lesser degree – have to adapt your proposition. But what does that mean in practice? 

Know your customers

The prerequisite is a full understanding of your prospective customers and that’s all about where they buy, how they buy and their expectations.

Depending on your target market, you could be looking at a very different trading environment. For instance, Brazil is a huge market for cosmetic products and sales are expected to grow 38% to $59bn by 2011, according to the research organisation Euromonitor. However, any company seeking to take advantage of that growth should be aware that much of the selling is “direct” and door-to-door rather than through the local equivalent of Boots. Research into how the market works is vital.

Pricing and positioning

It’s equally important to understand the economic factors influencing the market.  For instance, Brazil’s import duties are high – as much as 35%, depending on the class of product. It’s a policy that automatically puts foreign suppliers at a disadvantage when compared to local rivals who can sell more cheaply. However, that doesn’t mean that breaking into the market is impossible.

"The branding, advertising, marketing positioning and price point that define a product in the UK won’t necessarily deliver customers elsewhere in the world."

For instance, when Chris Ives, founder of Yorkshire based Ilkley Brewery, visited the country on a Trade Mission funded by Santander he found that wealthy Brazilians were prepared to pay a premium for quality imported goods: as much as $15 a bottle for beer. As an award-winning brewer, that played to Ilkley’s strengths and the company won an order from a Brazilian distributor for beers that can be sold at the premium end of the market. However, prices may also have to be adjusted downwards, as is the case with McVities, which sells smaller packet sizes at cheaper prices in emerging markets.

Product name and branding
Product names should be considered carefully. Although this is a particular issue in the consumer market, it's also something that B2B companies should bear in mind. Quirky brand names such as “Utterly Butterly” won’t necessarily work when consumers speak a different language, so large companies often aim for names with an appeal that transcends borders. That too has its hazards. For instance, Honda famously had to rename the Jazz for Europe after discovering that the word was offensive to Scandinavians. There’s no simple formula here. Perhaps the best approach is to discuss the product name as part of your market research when you visit the target market.

The name is only one part of the equation. Imagery that appeals to a UK audience may leave overseas buyers cold.

Product and packaging

There are a number of reasons why you might consider making small or even large alterations to the product itself. It may be that your UK product will be non-compliant with local regulations unless changes are made. Equally, though, even global companies tweak their products for the tastes of customers at a local level. The Coca-Cola drunk in Mexico is different from that in the US, and McDonald's menus can vary considerably from country to country.

Even if the product itself is unchanged, you may have to alter the packaging. For instance, in addition to printing packets and instruction books in the local language, it may be necessary to change the size of the packaging to accommodate local expectations and or regulations. This will increase costs but if the demand is there the rewards will ultimately justify the upfront investment.

Ultimately, the key to success is a complete understanding of the target market in terms of demand, the culture, habits and tastes of the prospective customer, while also being aware of how local regulations, tax laws and economic conditions are likely to impact on sales. From there you can tailor your product offering. Research – preferably on the ground – is the key.

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John Carroll - Helping businesses achieve International success. Head of Product Management & International Business, Santander UK