Leading Welsh economist Professor Brian Morgan argues that online marketing can make small companies ‘indistinguishable’ from large ones, while favourable exchange rates will help them compete on price.
In the current economic climate, with the promised upturn in private sector spending proving to be very sluggish, Welsh businesses will need to look at expanding their international activities if they want to boost sales. However, although exporting can be very rewarding, it is not an easy option. There are risks and potential pitfalls all the way but two developments have increased the chances of success in this tough sector.
Firstly, the sterling exchange rate is much more competitive now, when measured against our main trading partners, than it was when the recession began in 2007. In addition, the expansion of the internet and advances in web design now offer a huge opportunity for small firms to access new markets overseas.
The internet allows smaller companies to compete more effectively with larger companies – e.g. a professional, attractive website can make small companies indistinguishable from larger competitors. Good website design can help achieve a substantial and enduring impression on potential customers. On the web, size is less of a barrier to trade.
These two factors – the lower exchange rate and the global internet – can be used together to achieve competitive advantage. An important first step is to translate your prices from sterling into the local currency. Local pricing helps with brand positioning and makes your product or service more attractive to potential customers.
Secondly, make sure that your online offering is slick and ‘sticky’ – i.e. customers are happy to spend time on your website. But the site needs to convey information about your products and prices in the most direct, clear and practical manner possible.
Thirdly, get the language right. The dominance of English on the internet is rapidly fading so customers expect information to be provided in their own language – so a translated website is becoming an important part of the marketing mix.
But note that although there are 6 billion potential customers out there …….. this means that it is even more important to focus on a few key markets. The EU is important for Welsh firms but the problems with the eurozone are making it more difficult to expand sales in this important market.
However, outside of Europe the Emerging Markets offer new opportunities – especially the BRIC economies. In my experience the two most important prospects are Brazil and India. The 2014 Football World Cup and the 2016 Olympics will be hosted in Brazil so there will be opportunities to develop important trade links on the back of London 2012. India is a market of over 1 billion people where language (English is widely spoken and is the language of business) and heritage (democracy and the rule of law) give British companies a head start over their competitors.
With fiscal austerity and sluggish economic growth likely to be the dominant trends in both the UK and Wales for the next few years it is certainly not a bad time to be looking abroad for ways to generate new sales and kick start business growth.
Brian Morgan is Professor of Entrepreneurship and Director of the Creative Leadership and Enterprise Centre (CLEC), Cardiff Metropolitan University.
He began his academic career as an economist and worked in Whitehall as a Senior Economic Adviser before becoming Chief Economist for the Welsh Development Agency where he raised the profile of entrepreneurs and small firm growth as key drivers of economic development in regional economies.
After leaving the WDA, he founded the Leadership, Enterprise and Economic Development Research Unit (LEED) at Cardiff University Business School before moving to CLEC.
The main focus of CLEC is the delivery of state-of-the-art leadership and management development programmes (like its new 20Twenty Leadership Programme for SMEs) and conducting research into regional competitiveness, leadership and the business development needs of entrepreneurs.