Success in diverse markets requires local knowledge and global expertise
What sort of impact does Diwali have on consumer electronics sales? How long do the Lunar New Year festivities last? How does the Malaysian market view cash-back offers? Who are the most dominant PC retailers in Hong Kong? How likely are Russian consumers to hand over their banking details as part of a rebate offer?
These are all questions that any global retail sales strategy must address if it is to carry over any domestic success into foreign markets. Though essential, offering good value is only one part of the equation. How well a company adapts to the unique needs of each individual market can make or break any sales promotion, regardless of how substantial the savings are. Disappointing and inconsistent results have led companies around the world to abandon the assumption that there can be a “one size fits all” solution.
For retailers and brands hoping to make an impact on foreign markets with attractive headline offers, risk-managed sales promotions – enforced with solid data – offer compelling results, regardless of which corner of the map is being targeted.
These promotions can come in a variety of forms, such as cashback offers, trade-ins, prize-draws, instant wins and satisfaction guarantees. Instead of taking all the risk of an over-performing promotion, retailers can be assured that the promotion will not backfire and leave them in the red, thanks to the combination of predictive analytics and specialist underwriting guarantees.
New challenges for new markets
The potential challenges a campaign can run into are numerous, ranging from the relatively simple, such as appropriate translation, to more complex challenges like working around public and religious holidays, understanding distinct differences in human behaviour and how different people may react to a certain promotion and accommodating the ways in which different demographics prefer to handle transactions.
Issues of trust can also come into play. For example, while consumers in the UK and much of Europe are happy to share their bank details as part of a promotion, surveys have found that as many as 70 per cent of consumers in the US are uncomfortable with this idea. Additionally, many consumers in Russia and China lack personal bank accounts. Overcoming such challenges requires a level of ingenuity and local partnerships that can facilitate alternative methods of payment, leading many companies to work through PayPal, Alipay and other local services in these markets.
With many companies setting their sights on growing Asian economies, understanding the idiosyncrasies of these diverse markets, which are often vastly different from their European and North American counterparts, is becoming increasingly valuable.
In consumer electronics, for example, partnering with the leading retail chains to carry a promotion is nearly standard. Hong Kong, however, lacks an equivalent to Best Buy or Curry’s, as most consumers purchase their electronics from smaller outlets. In order to get their message out to the end-user in such a fragmented market, promotions need to be run through ten or more of the largest of these small businesses, allowing the campaign to gain traction and attract the attention of other local retailers.
In Malaysia, research has shown that money-back guarantees are especially attractive to shoppers, with 71 per cent of respondents to an Opia survey listing it as the best deal in a list of ten promotions. However, many consumers (74 per cent) were cautious of such deals, saying they were doubtful of how long it would take for them to receive their money back.
In order to address these concerns, which are not present in the UK, the promotion could be adjusted to ensure customers are paid as quickly as possible and that they are kept up to date with the progress of their claim.
Employing tailored techniques such as this ensures that manufacturers and retailers will not have to rely on costly price drops in order to move inventory. With built-in protection against over-redemption, these risk-free promotions can allow companies to run attractive campaigns without having to worry about their bottom line. This helps to guarantee shoppers a great deal – reducing the price of change by as much as 40 per cent, while giving brands a profitable outcome based on pre-determined fixed costs.
Retailers and brands across the world can access a scale of offer their profit and loss could not sustain otherwise. This has the added advantage of making new promotional mechanisms, such as cashback, rebate, trade-in and buy-back offers, available.
Regardless of which market is being targeted and which mechanism is being used, the crucial element is to ensure promotions are fully managed for risk, underpinned by reliable data and underwritten with solid insurance. They must also be backed by excellence in customer service and managed by companies with staff recruited for their expertise and experience who are capable of guaranteeing full execution.
By providing this level of reassurance and communication, brands will find they are the first-to-market with a proposition that is guaranteed to be seen as attractive by the end-consumer.
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