You are a business owner, an entrepreneur, a product manager, a product marketer or a marketing manager. You manage a product, a service, a business ; addressing B2B or B2C. You want to increase revenues, user base, and market share. You are wondering if now is a good time to go global. In this article you’ll find some of the key reasons that could trigger the call.
Let’s first set the context. Twenty years ago, going international was still a heavy move. At the time, growing beyond local borders often meant having a local presence or finding a solid partner or representation in each new country. Access to information was made harder which induced increased complexity, risk and uncertainty. Going international brought a lot of burdens many businesses couldn’t afford at the time.
Fortunately for entrepreneurs, businesses and clients, this has drastically changed and is still evolving. In today’s world, more and more brands and products are made available to the wide audience, internationally. One simple reason is because it has been made easier. We now have much wider access to information. Mentalities have changed on (almost) all sides. In many cases, clients are more acquainted and open to foreign products and services. So you can now think global and be global for your products and services.
So, wherever you sit in the product lifecycle, mind the 4 below reasons as potential triggers to think global with your products and services.
1. Market opportunities: Are other markets more attractive?
More and more frequently, the local market is not the one delivering the best opportunities. A bit of research will help you find out better growth opportunities are there, beyond your borders. It can be because of market size. If you have started a business in a small market such as Switzerland — a little bit more than 8 million inhabitants — you’ll most of the time think your business global from start. But that can also be true for larger countries.
For example, many French luxury brands have significant business volume at home but are now heavily investing (and growing) in China — conf. this article. It is easy to understand. Growing addressable market. Indeed, while products delivered by French luxury brands are not addressing all Chinese consumers, their addressable market is growing steadily. Level of income (and purchasing power) are determining factor to segment market and get the size of addressable market in this case and is very favorable for French luxury brands. In some cases, addressable market is not correlated with population size. For example, smartphone penetration is much higher in South Korea (70–75%) than in Spain (55–60%). If you sell a product or an app for smartphone, you might be more interested by the South Korea market while population size in both countries is similar. That’s why that’s addressable market that matters. Check this article with techniques and tools to calculate your total addressable market.
Beyond the market size itself, it is also about trends. How fast are your potential addressable markets growing? We often refer to the BRICS — Brazil, Russia, India, China and South Africa — or the MINT — Mexico, Indonesia, Nigeria and Turkey — as groups of countries with fast growth pace and strong business and economic potential and short and medium term.
So, in practice, what you want is to look at your total addressable market today, and tomorrow. In short, this is the size of your target audience, once qualified with the relevant criteria specific to what your offering deliver.
2. Product-market fit: Does your product bring solutions beyond your initial market?
It all comes down to the problem you product solve. Is it a problem that is also experienced by consumers or companies in other geographies? Do they have solutions already? Substitute? In an ideal scenario, the problem you are solving with your product is universal. If you solve it in a much more qualitative manner than any other solution out there, this gives your product high potential global growth.
In many cases, you will identify that market needs and pain points in various geographies are similar but with some nuances. The product relevance can differ widely. For example, when it comes to mobile wallets and payments, it certainly help consumer everywhere around the world and gain importance. When looking at it closely, we see it is even more relevant for geographies with high mobile phone penetration and low computer penetration or high unbanked ratio. This is the case of various African countries — conf. this article. Other factors need to be looked at for a good product-market fit. For example the willingness to pay. For a good assessment, you might want to identify and qualify needs of each segment and addressable market, both qualitatively and quantitatively.
3. Competitive environment: Grow or die.
In various scenarios, competition can be the trigger to fastening your global growth. Industries, product and technologies all have a lifecycle. And after the nice and sexy part of early growth, the times of market maturity comes. Sector will consolidate. Almost systematically, this means there is not enough room for everyone to grow. Smaller actors will die or be eaten by bigger peers. Telecom industry is a good example as the number of enterprises is planned to decrease by more than 20% in next 5 years and four bigger operators share 93.5% of the market — conf. this article. As a result, your local market can be under significant competitive pressure bringing revenues and margins downs. To keep your business growing, you are then forced to look for less competitive markets with good revenue potential.
As a matter of survival or as an act of anticipation, international growth is a way for you to increase your global market share and take a bigger piece of the pie. You might even take the first-mover advantage and discourage other local competitors to grow globally.
4. Business model: Fit for scale.
Sometimes, innovation and growth don’t come only from the product or experience delivered but also from its business model. It was the case of many SaaS businesses in the early 2000s. For example Dropbox, Spotify or Netflix. More recently it is also the case with Uber-like business models popping out everywhere.
You might want (or have taken) the bet to build your business model and pricing strategy in a non-conventional way to differentiate your offering and make your way into the industry. Marginal cost is supposed to decrease in all businesses when volume goes up. It might be particularly true with your business model and cost structure. And you might have decided to play with this. The trigger for fast global growth would then be the need for massive adoption to do economy of scale and deliver the unmatchable pricing model you designed. The Iliad group in France (founder by Xavier Niel) and its brand Free is a best practice on how to shake well established industries (i.e. telecom, internet) with aggressive business models — conf. this article.
So, is it time for you to go global ?
If answer is yes, you’ll now probably look at how to be ready for it. You’ll have to answer questions such as “is my product technically easy to scale to a larger number of users”, “am I able to support a growing number of users around the clock?” “am I properly funded to support my growth? I much do I need?” etc. We’ll come to that in coming articles.