At the recent Transatlantic Business Conference, the Pittsburgh Product Strategy Network presented a panel discussion “Creating Globally Competitive Products” with product and marketing executives from five life science and information technology companies based in the U.S. and U.K. The panelists discussed their approaches and experiences with creating globally competitive products for foreign markets.

What, exactly, should a company do when considering trade in a foreign market to improve its chances of success? As it turns out, according to a diverse group of early stage and global leaders that participated in a Pittsburgh Product Strategy Network panel discussion at the Transatlantic Business Conference on October 27, the answer is the same: find a compatible local partner in the targeted country. And that applies to trade going in either direction.

How did they identify the opportunity?

• Bounce your product idea off your existing sales staff, Marconi’s Dave Blakeney advised. If they like it, have them arrange introductions to prospective customers in the overseas market so you can explore whether there really is an interest in your product or service.
  
• At the same time, according to GlaxoSmithKline’s Joe McGovern, the fact that there may be a market need doesn’t automatically mean you can succeed in exploiting it; there is a lot of work involved. With countries, like customers, follow the 80/20 rule; if you’ve already done business overseas, start where you’ve had successes in the past and then add other countries that are culturally similar to it. 
  
• If you are a large company, IBM’s Mark Sherman advises, you can hire contractors to carry out primary research and develop market intelligence about overseas customers. But if you’re small, the way to go is through partnerships, particularly with multinational companies who understand their overseas markets and who can put you in touch with their contacts in still more places. 
  
• For a smaller player, like the UK’s Molecular Skin Care, the steps toward approval as a prescription item are just as long and costly as they are for much larger pharmaceutical companies. So instead, the company seeks out low hanging fruit – products that can be introduced as over-the-counter items.
  
• To Merlin 360’s Geoff Berry, whose company makes asset tracking systems, the key is familiarity. Look for overseas markets similar to those you know at home and also look for cues from what your competitors are doing, he advises. 

If a promising opportunity has been identified overseas, how do you determine what the proper product would be? How do you uncover nuances of differences that could be critical to a product’s success?

• Differences in product design from place to place are fairly easy to spot, Joe McGovern pointed out. You can go there, pick up the products, and see what they look like. In some places, however, the package is almost as important as the product. In parts of Africa, for example, the paper in which headache powder comes wrapped often finds a second use as cigarette paper. In third-world countries where income is low and daily shopping is routine, a number of items, including medicines, are sold in single dose units. So your product has to fit into the market, yet it needs to be different from the competition, he advises. 
  
• IBM’s Mark Sherman noted that you will sometimes find yourself operating in an environment where one giant company or buyer dominates the market, and they will dictate exactly what you must do to survive. 
  
• Much the same is true in product lines subject to government regulatory standards, Marconi’s Dave Blakeney pointed out. In addition to the actual product needs that people are looking for is someone who can satisfy the standards in highly regulated areas such as telecommunications. “These types of influences actually drive what we do tremendously,” he said. “There is some customization required as you go to different parts of the world.”

Once the opportunity is identified and the product issues resolved, how do you go about pursuing it, particularly if you don’t have a business infrastructure in place in the target market?

• Look for a partner in the target market who recognize a clear chain of value from your organization to theirs and from themselves to their customers, advises Joe McGovern. And look for organizations that find themselves in business circumstances, such as a shrinking market, which are looking for new ways to move forward that would make them particularly receptive to your approach. 
  
• IBM’s Mark Sherman agrees: Finding the right partner is important, particularly on the retail-distribution side. But they have to believe in the value proposition your bringing to the table. “What we found is that when they don’t believe, they don’t call you back, so trying to create that deal with them is a very painful experience. But if they do, it becomes much simpler,” he said. “We have dozens of partners worldwide.”
  
• In some places like Japan during the 1970s and ‘80s, local product distribution systems can be very complex and difficult for foreign companies to penetrate, GlaxoSmithKline’s Joe McGovern recalled. A Japanese distribution partner made market entry for his non-Japanese company much easier. A local advertising agency versed in the nuances of Japanese life and culture was also pivotal, he said.

Once you’ve made the decision to partner in a new overseas venture, what are some of the potential pitfalls and what should you look out for in choosing a partner?

• For one thing, be careful when you retain an overseas advertising agency to help launch your product, advises Joe McGovern. Differences in the information presented, in the product positioning, and other content areas between your home and overseas markets will work against you. At GlaxoSmithKline, the general rule is to hold half the information constant, regionalize a quarter of it, and localize the rest. Locally designed Web sites, however, contributed little value, at least in GlaxoSmithKline’s experience. 
  
• It is important that the basic chemistry of a partnership arrangement be comfortable for both parties and that they buy into the same value propositions, according to Molecular Skincare’s Simon Ward. Partnerships tend to be long-term and hard to get out of, so it’s important carry out due diligence before cementing the ties. 
  
• Have a clear idea of exactly what you’re looking for in a partnership, advises Geoff Berry. “When we approach a prospective partner, we have to be very clear about the character and shape of a partner. It’s something we consider very deliberately.”
  
• It’s also essential to make sure your expectations match those of your partner, according to Marconi’s Dave Blakeney. Differences are inevitable and they are easier to manage if expectations are established clearly upfront. “You’re going to have issues with your partners, whether it’s sales compensation, or channel conflicts, or maybe product conflicts. All these things have got to be resolved to the satisfaction of everyone.” 
  
• Find out whether your prospective partner has a track record of partnerships with others, suggests Glaxo Smith Kline’s Joe McGovern. And remember: when you break off a partnership, you can end up creating a huge competitor with whom you have shared every secret. 
  
• Look carefully and honestly at your own business ethics that deal with reasonable and acceptable business practices, IBM’s Mark Sherman suggests. Openly discuss them with your prospective partner, and acknowledge possible cultural miscues that could create misunderstandings. 

Once a product has been launched overseas, how does language and cultural differences affect your support?

• At GlaxoSmith Kline, it is a question of standardizing or localizing the product, and the answer, which is often in degrees, varies from market to market. 
  
• With Marconi, their customers in overseas markets prefer English, for technical accuracy, and its customers often adapt the company’s information to their local language. And besides, Marconi routinely flies its technicians anywhere in the world their services are needed, 24/7. 
  
• And for IBM, where 70 percent of its customer contact now comes through the Internet, having to support its products in local languages – even where the overseas customer understands English – is essential. 
  
• For Merlin 360’s Geoff Berry and Molecular Skin Care’s Simon Ward, part of the answer is to find partners who are comfortable doing business in English.

Doing business abroad is almost always better when you do it with a local partner. But you need to be discriminating when you select a partner.

ABOUT THE AUTHOR:
Peter Longini is a contributing writer for the Pittsburgh Product Strategy Network. Peter is a former professor of communication research at the University of Pittsburgh and professor of TV-Radio at Brooklyn College, CUNY. During the 1980s, he was an executive speechwriter at PPG Industries in Pittsburgh. Since 1992, he has been the principal of Peter Longini Communications, an editorial services company in Wexford, PA whose clients include various publications, public sector agencies, nonprofit organizations and corporations. In January 2003, Dr. Longini became an adjunct faculty member of New York University and Director of Communications for Cranberry Township, Pennsylvania. He can be reached at This e-mail address is being protected from spam bots, you need JavaScript enabled to view it