The reality of tougher trading conditions and the high Australian dollar means that SMEs will need smart and well-targeted strategies to make a dent in overseas markets. How can a small business determine a successful export strategy?
Pfeiffer’s Winery sits on a high embankment above a sweeping bend in the Sunday Creek near Wahgunyah, in Victoria’s Rutherglen wine district. It’s where Chris and Robyn Pfeiffer have raised their children and grown their wines for almost 30 years.
It’s from this idyllic rural base that the Pfeiffers launched a robust export business.
More than half of Pfeiffer wines sell overseas, into the UK, Canada, China, Singapore and Malaysia. “With around one winery for every 10,000 Australians, export was on our agenda early on,” says owner–manager Chris Pfieffer. “If we had any hope of achieving the economies of scale we needed to make affordable wines, we had to find markets outside of Australia.”
It was also about vulnerability. “If you only have one channel to market, you’re exposed. Increase your sales channels and you spread your risks.” For Pfeiffer Wines export has been a 30-year learning curve, with triumphs and missteps marking the way. “What’s the key thing we’ve learnt?” ponders Chris Pfeiffer. “Every market is different, and every company is unique. First, get in there and learn how the market works. How much is it going to cost you? And how much is it worth to you?”
How does an owner–managed business pitch their product to an international market? How can you map out opportunities and devise ways to crack them, while keeping your hand firmly on the helm of your local business?
According to Peter Lamb, of La Trobe Business School, Jörgen Sandberg and Peter Liesch, of UQ Business School, authors of a first-in-its-kind study of how small owner–managed businesses practice internationalisation, the key to a successful strategy is not about the target market, or the product. It’s the individual who drives the process.
They studied the export activities of a group of owner–managed Australian wineries and believe they have produced new insights into how successful SMEs approach exporting. It is the differences in owner–managers’ understandings of what internationalisation means to them that explain how they approach export markets and organise their internationalisation activities.
Their study indentified four “understandings” of how winegrowers understood internationalisation: confronting opportunities; competing on price; portraying distinctiveness; or storytelling.
CONFRONTING OPPORTUNITIES
Confronting opportunities is about overcoming uncertainty in, or regarding prospective export markets. Dr Peter Lamb says business owners who view their export strategy as confronting opportunities need to feel confident and prepared to make these forays into markets overseas.
“They spend a lot of time researching the different international markets to give them confidence,” he says. “It’s about understanding all the background information that you intrinsically know about your own market.”
International agents are key. Finding the right agent with a good business fit is crucial to this strategy. “Once you have found your agent, find out as much as you can about them, verify their client list and establish their track record of pursuing market opportunities promptly.”
COMPETING ON PRICE
This strategy is clear: being unknown in the market need not be a barrier if you can be price competitive. An exporter who sees internationalisation as competing on price assesses the price competitiveness of markets they are interested in, and uses price to compete and attract agent interest because they are relatively unknown in international markets.
PORTRAYING DISTINCTIVENESS
Adopting product distinctiveness means offering an appealing product package that agents believe they can ‘sell’ to customers.
“Value is portrayed through the product’s perceived distinctiveness and uniqueness,” Liesch says. “Distinctiveness for winegrowers relates to styles and regionality. For this strategy, growers need to find agents who share their passion for their wine varieties and ensure the agent educates the market to reinforce this distinctiveness. There are wines and there are wines!”
STORYTELLING
Storytelling creates memorable experiences to engage prospective buyers. The research makes it clear that the wine, the philosophy of the wine maker and how the wine is ‘made’ can become a story to attract agents and their customers. This moves beyond the uniqueness of the wine to the grower’s passion for it, and this passion becomes embodied in the product with storytelling.
During the lifecycle of his business, Chris Pfeiffer has experimented with each of these approaches. “Our first export market was the UK. This was clearly about confronting opportunities in the demand for quality Australian wine. In China, wine is commoditised – often sold under a different label, perhaps not even as Australian, so price competitiveness is key.” In other markets, storytelling has proved effective – and Pfeiffer has approached these markets with a compelling tale of heritage vineyards, aged oak vats, of “human follies, tragedy and traditional wine making”.
When it comes to storytelling, social media has been a boom. “Twitter and Facebook allow us to talk directly to customers, wine writers and brand champions in markets across the world. If we tweet a review, it’s picked up, spread and shared. Social media has brought the world closer – at least for our English speaking markets.”
The experience of wine growers translates readily to small business owners in other industries. Antonette Golikidis of organic babycare range Little Innoscents, recognises two of the study’s approaches to internationalisation: confronting opportunities and portraying distinctiveness.
Golikidis says if she hadn’t begun exporting to Singapore and Malaysia last year, she would not have survived, and she has learnt a number of lessons in the process. Not least being to go in person to meet with the distributors – a confronting opportunities approach.
“You need to screen distributors. While they can report on what they can do for you, go there and make sure they are not exaggerating. You should also follow up referrals to back up what you heard about them,” Golikidis says. Visits also build rapport and show commitment.
According to Golikidis, the philosophy behind Little Innoscents is about taking its story to the overseas community and increasing consumer awareness of natural and organic baby skincare and the difference it can make to those suffering from sensitive skin issues. This is a classic “storytelling” approach to export.
This research into internationalisation shows a one-size-fits-all approach does not work. A creative mind, and a boost from social media, allows the resource-constrained owner manager to meet the challenges of new markets – with confronting opportunity, price, distinctiveness and storytelling.