Insights

Posted under: Case Studies
  • Omicus’ edge is bringing in strong operational expertise to profitably open international markets. Our experience has validated that a few key principles underlie most cases of profitable and sustainable international expansion: building brands, low overheads, and pay-as-you-earn support.
  • Client organizations may wish to adopt these principles for their international expansion as well, as they understand that opportunistic exports have limited potential to deliver sustainable revenue growth.Read More on Opportunistic Exports
  • We have developed a business model based on these principles to deliver profitable and sustainable business starting in the first year of expansion, with continued growth in the months and years to come.
  • We present here an illustrative case study on what an Omicus partnership may look like to open and expand a new country for your organization. It is based on a real-life case though identities are kept anonymous, and some information modified for privacy.

Background and Challenge

  • Poseidon, a mid-size global consumer goods company, had employed an opportunistic exports model for a large country for seven years, yet annual sales had stagnated at less than $0.3M with a negligible share of market.
  • Poseidon’s engagement with and support to the business in this country was minimal. The company never advertised; neither did the distributor. Poseidon’s strategy was to give a substantial discount to the distributor in the hope that it would build brands, which did not happen. Instead, without meaningful engagement from Poseidon, the distributor did what they felt was best: attempt to increase sales by ordering more SKUs from Poseidon. This turned out to be largely a zero-sum game, with new SKUs cannibalizing the sales of existing SKUs.
  • As a result, Poseidon had over 40 SKUs in the market with some bringing in less than $5000 a year. The distribution was negligible at under a thousand stores in a country where the universe of relevant stores was around 50,000.

Poseidon, seeking accelerated growth for its international business, decided to change strategy to leverage the potential of consumers in this country. However, it did not want to make large upfront investments in this country, since these would be a drain on its overall international business.

Key Challenge: Drive share of market gains for Poseidon’s brands, in competitive categories, without significant upfront investment.

The Solution

The group engaged by Poseidon to drive growth in the country took the following actions

Solution Elements Build-Brands Low Overheads Pay-as-you-earn
Appointed a new distributor, focused on brand-building, by conducting a low-cost effective mapping exercise. Distributor selection and negotiations were conducted by individuals with this specific expertise. Right Right Low upfront investment
Developed a unique value-proposition for key SKUs keeping local realities in consideration and conducted low-cost consumer research to validate value propositions. Right Right Right
Developed a plan to implement a cadence of support for each product in the market. Right N/A Right
Appointed a local marketing agency with capability to launch products without large upfront investments. Right Right Right
Developed an effective launch plan together with the distributor and local partners, including retailer engagement, and launched the products as per the plan. Right Right Right
Monitored plan implementation with the help of KPIs and took actions as needed to drive growth. Right Right Right
Ensured that all regulatory requirements were met. N/A. Meeting regulatory requirements supersedes other considerations

The Outcome

  • Financial
    • Achieved $0.9 MM sales at gross margin higher than goal in the first four months after adopting the new model.
  • Operational
    • Brought over 10,000 stores under coverage.
    • Established Information systems for data-driven intervention.
    • Executed consumer communication strategy to make Poseidon’s brands look like leaders.
    • Increased market-share to 5% in some stores within two months of availability.

These outcomes met Poseidon leadership’s key requirement: be ‘profitable from the start’.

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