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7 Steps To Choosing The Right Route to Market For You And Your Products

re you looking for a new market in which to sell your products. Do you want to go direct into this market, or select a partner to sell your products into a new market? This is a particularly challenging task when the market is a foreign one. Whether your product is a complex software solution or a plush toy, you want the right partners to be selling on your behalf, don't you? A partner you can trust, who understands and embraces your vision, who pays you what he owes you when it's due.
Whether you are hoping to appoint a reseller who just provides the sales and marketing expertise in your chosen market, or one who will be able to sell, implement and support your product, there are fundamentals that apply universally, and I outline the 7 critical steps to success below.
Step 1 - Identify your preferred channel. Potential routes to market for your product include:
Selling from your home base via the Internet. This works with relatively low price items where a local presence isn't required. If you are selling software this way, your main challenge may be getting paid
Using a Sales Partner. These are individuals or companies that have a local presence in your potential market and sell your products on your behalf. The benefits are a local knowledge and a low cost of entry into the market. Downsides include lack of knowledge of your product and vision, how much of your profit margin you have to 'give away', and the possibility that your great product ideas may be "borrowed" and you are cut out of the loop. This is particularly true of certain markets where piracy is almost seen as a legitimate business practice.
Set up an international subsidiary of your own company. Whilst this gives you far greater control over the sales function, the potential for higher profit margins, and direct contact with the end customer, the costs of entry are far higher, and success rates of companies doing this are poor.
Signing up to an OEM deal, where a company sells your product under their own branding. This will give you quick access to the market and potential customers, and is a lower cost approach to that of establishing your own presence. However, this does mean giving up your own brand name, risks the loss of your intellectual property, and can make you too reliant on the one partner.
Step 2 â€" Decide whether to go Direct or Indirect.
As discussed in Step 1, there are benefits and downsides to either setting up in the target market yourself, or choosing to go via a Partner. In summary:
Direct: high investment costs, long time to go to market, requires high levels of management, and the cost of failure is high (the cost of closing down a business can be a lot higher than expected, particularly in highly regulated or unionized environments).
Indirect: low investment costs, quicker access to the market and its customers, lower level of management required (more operational), and your costs of failure are limited.
Step 3 â€" Review your chosen market's "Ease of Entry"
For example, if you are looking to invest in the European market, what issues do you need to consider, and how do they apply to the various parts of the European Union? Contrary to popular belief, the countries of the EU do not operate as a single market, and they are not similar to the various States in the USA in terms of working practices. You will need to consider the following barriers to entry:
Language: if you are English speaking, consider which countries have English as first or second languages. For example, in the UK this presents a low barrier to entry, in the Nordic countries they are used to conducting business in English, so it is a medium barrier, in places like Germany, Spain and Eastern Europe, they are not, and this presents a high barrier to entry.
Competition: you need to carry out market research for the penetration of similar products into your new market, and who else is already selling to this market. For example, if you are selling software products, the Nordic countries, Italy and Spain present lower barriers to entry due to lower competition, with the UK as probably the most difficult area to penetrate due to existing competition. If you wish to enter the US market, then be aware that competition is very fierce, and is often ruthless in pursuit of goals.
Market size: you should consider who can afford your product, and how big the potential customer base is. The UK, France and Germany lead here, with Eastern Europe presenting the biggest challenge.
Corruption: if you want to enter the market and be able to trust your partners, you need to understand what that country's attitude to corruption is.
Adoption cycle: consider how long it typically takes your new market to adopt similar products, and adjust your budgets and revenue expectations accordingly.
Step 4 â€" Decide if you just want to market test a single new marketplace, or take on several at once.
The implications of this choice are fairly self evident â€" if you choose a single market, then your exposure is lower, your costs lower and your management focus can be given to a single area. If you go for multiple markets at the same time, then your investment in all these areas is higher, but the potential advantage you have is a faster to track to success, with bigger returns in a shorter time-frame. What you need to consider carefully is whether you have the capacity to take on the multiple challenge.
Step 5 â€" Choosing a Partner
If you decide to go the Partner route of selling to your chosen market, then how do you select the best partner for your business? Firstly, make up a long-list of potential partners. This can be done by yourself, but I would recommend you hire the services of a salesperson that has experience of products similar to yours to carry out the research. This research can be kicked off by trawling the internet â€" vendor websites are a good starting place.
You should also look at the partners of your competitors, as they could be a potential source of reseller, particularly if your competitor is struggling in the market or if the reseller is looking to move away from being reliant on a single source of supply. The benefit of this approach is that they already have experience and market share with similar products to your own.
Step 6 â€" Convincing a potential Partner that you are the right choice for them
How do you make yourself an attractive prospect for your potential partner? Remember, they will not initially see you as an opportunity, but rather as a risk. They may well have bad experiences of reselling other's products in the past. The key thing to bear in mind is that the partner will love you for the money you can make them, not for how great/wonderful/cute/cutting edge (delete as appropriate) your product is.
When approaching your potential reseller, be clear on what your proposition is (you need to have done your homework first). Tell them how much they could sell your products for, what margin they could expect, what price points there are, be clear on what your product does, and how it can be applied by their customers.
I suggest that you prepare a one-page overview of your proposition which you can give to your potential partners. This should include all of the above items, plus a profile of yourself and reasons why you would be good to do business with.
Step 7 â€" Weed out the Timewasters
Some potential partners will express an interest in you and your product just to gain market intelligence about your business. To weed these out, prepare a Partner Application Form that you require them to complete. This will help to get rid of the timewasters or those with a casual interest. Include questions on sales figures for the past few years, trade references, client references (if you can get these, though they may prove difficult to obtain), a profile of the company, and ask them why they think they should be chosen as your reseller. Be careful though, if you make the form too onerous you may scare off genuine interest.
When you do get a response, check vendor references carefully, as these are your best source of information on a reseller. Ideally, get at least two references from foreign companies with similar products to your own, and ask about their sales performance.
A point worth bearing in mind is that whilst you can and probably should carry out financial searches, this information has limited value and is often out of date, particularly if the company only files annual returns.
In conclusion, if you are intent on taking your products to foreign markets, then decide if you wish to take on one or several new markets in your initial plan, select these markets very carefully, know why you want to go for these specific markets, be prepared to spend money, localize your products and your marketing plan, and think long term!



Jan Norman has worked and lived on three continents (USA, Europe and Africa) and run two businesses. He has also held roles within the business management function of several large organizations. He currently runs an on-line toy retailer called Fat Banana Feet, based in the UK. Feel free to visit his site at www.fatbananafeet.com