Top 3 Reasons Why Your Great Products Don’t Sell in Global Markets

Published Sept 26, 2016

This is the first article in a 5-part series on how to change your business strategy and be more successful in the new global economy. It is based on The 5Ps of Global Marketing Framework first introduced in The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy.

With the exponential growth of Chinese companies and other emerging competitors, the rules of the game have changed and success factors to winning business have shifted, particularly in emerging markets.

High-tech companies from the West have traditionally prided themselves on innovating superior quality products as the primary influencer in closing sales. ‘Our box is better than their box, so the customer will choose us.’ While this has often been the case in developed markets, this is not the prevailing outcome in emerging markets, nor in some developed markets these days. Emerging competitors from the East, especially from China, are winning customers’ business more often and gaining significant market share.

This is not just rhetoric but is proven with solid data trends from renowned analyst firm Dell’Oro Group. Looking at mobile RAN market share trends over the last 5 years, there is a shockingly consistent downward shift in market share points of top Western-based manufacturers like Nokia/Alcatel-Lucent and Ericsson, in contrast with an almost perfectly reciprocal increase in market share points of Chinese companies Huawei and ZTE. More specifically, the cumulative loss in market share points of the Western-based companies was 15.7 points down and the cumulative increase in market share points for the Chinese companies was 16.0. A strong and obvious shift that needs to be taken seriously.

There are many reasons why Western-based companies are failing worldwide. One aspect is that the needs of emerging (or evolving) markets are different than those of the West. And while brand equity and quality go a long way, emerging customers have different priorities or critical decision factors. As a result, the West needs to evolve the way it does business globally in order to survive and thrive.

The Product ‘P’ in Global Strategy by Amy Karam

Why Product Superiority Doesn’t Always Win

1. One size does not fit all. A basic business tenant is to ‘know your customer’. What do emerging customers really want and need? Do they really need your fully loaded, feature-rich router? Or do they just need basic connectivity and power-surge protection? Don’t recycle your mature products into new markets. Develop localized, market-appropriate products that satisfy their needs based on where they are in the lifecycle.

2. Product offers are not enough. Offer Solutions. Enable the “YES” choice to be you and not an emerging competitor. What many Chinese companies are good at doing, despite average (or less than average) products is they understand the encompassing needs of an emerging markets customer. I call it the ‘free fries and extra ketchup’ versus just offering a really good burger. Having local product support staff available to answer questions is important to new customers. Knowledge transfer and training is also key. Helping them figure out how to pay for your products (financing options) is also a significant component in their selection process.

3. Slow-mover disadvantage. The cliché term, analysis-paralysis is symptomatic of many risk-averse companies and causes an often-times irreparable loss of market share. Emerging markets is no longer a novelty but a necessary part of a company’s long term growth strategy and this requires a leap of faith, a higher risk tolerance and a faster time to market. Many companies take a wait and see approach, get too hung up on immediate return on investment and over-think the product development strategy. Think less, act fast, create ‘good enough’ products and get to new markets quickly before the multitude of other emerging competitors. Time-to-market is more important than getting there perfectly but too late. Think ‘good enough and now’.

Amy Karam is a speaker, global expansion consultant, corporate instructor and the author of The China Factor: Leveraging Emerging Business Strategies to Compete, Grow and Win in the New Global Economy .
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