Manufacturing growth via exports

Posted on 20 Apr 2011 by The Manufacturer

Lee Hackett of market development firm Lead Creators on how manufacturers can cost effectively sell abroad.

It has been widely documented in the press that significant and sustained growth in the manufacturing sector is going to be the route to a more balanced UK economy. And it is my belief that effective market diversification is going to be pivotal to achieving this.

The Government claimed that this year’s Budget focussed on the measures that need to be in place to remove barriers for growth in the sector, but the proposals I have seen so far only appear to tackle the financial concerns involved with exporting. While this is a significant hurdle to overcome it is really only half the battle. Recent figures from the Forum of Private Business support what I have found to be true – that many smaller manufacturers are struggling to get their products to market. In fact, one quarter of business owners surveyed stated overcoming difficulties in reaching new markets was the top priority.

This doesn’t surprise me as manufacturers’ expertise, understandably, is in designing and making new products. But if a company wants to achieve rapid growth, market diversification is essential. That said in my experience there is a certain degree of hesitancy from manufacturers to take their products to an international market. This can be because there is a perceived lack of internal knowledge on international trading, which often results in the company being unable to effectively identify the risks involved with exportation.

In my opinion, the main risks to a manufacturer when looking to do business overseas involve uncertainty over the budget required, a lack of knowledgeable resource to draw upon and ambiguity on how to effectively drive demand for their products in an unfamiliar market. While it is virtually impossible to completely eliminate risks, working with a market development partner can help a manufacturer manage and minimise risk to achieve accelerated market entry.

Outsourcing expertise

I understand that it is not common practice for manufacturers to outsource in this manner, but it is an innovative and cost effective way for manufacturers with limited experience of new territories or those that have restricted internal resource to draw upon, to realistically achieve business growth.

A vital starting point for an international market development programme is always substantial market research and analysis. So in my opinion, it is essential to work with a partner that collaborates with an established international organisation, such as the UKTI, as this will ensure identification of target market sectors, sizes and most importantly potential. There is no point entering a market where there is no demand for your product.
There are ways of testing the appetite of the market for your products that involve only modest financial investment, so lower the risk. At the end of the day the success of international market penetration will hinge on the ability to create real opportunities in the region. As a result I suggest a robust sales pipeline is essential and to save on cost this can be managed from the UK.

Creating leads

When embarking on a lead creation campaign in this way, the staff should be consistent, professional and focussed with a clear and agreed procedure in place to ensure all enquiries are handled efficiently. At the initial point of contact with prospective clients, it is necessary for the staff to gather as much market intelligence as possible, such as who is the decision maker and when they are looking to place an order. My golden rule for closing a sale is that staff should be enthusiastic as people like to do business with people who are hungry for the sale.

The final link in the lead creation process is that all the information and progress of the campaign is reported back to you which ensures seamless integration with the existing sales team. A partner that can feed information into your existing structure to me is key, as it ensures smooth management of the whole market development programme through to internal handover. This means that you do not need to employ any extra resource either in the UK, or in the region, before there is a proven market for your products.

Feeling the benefit

I hope that so far this all seems straight forward but a well managed market entry programme also requires a number of other crucial elements in order to achieve accelerated penetration. Effectively evaluating and deciding on the right route to market for your product will be fundamental and a suitable partner should be able to utilise their experience of the territory to both advise and implement the right channel. It could be that the best route is direct to market, for example I know in the Middle Eastern construction industry contractors prefer to deal with manufacturers rather than distributors or it could be in other cases the preferred route is via third parties.

Being able to tap into specific market intelligence is just one of the advantages of outsourcing but they stretch much further than the obvious establishing and sticking to agreed budgets and timescales. For example, working with a partner allows the manufacturer to concentrate their efforts on what they do best – producing high quality products.

In my opinion collaborating with a partner to manage international market penetration not only protects the manufacturer from any preliminary sales peaks and troughs but can also support the steady growth of the business internationally until the territory is mature enough to justify dedicated internal resource.

Lee Hackett is the founder of market development company Lead Creators