Strategy design begins by defining the business. To define a business, all you need to know is which product do you offer and which market do you offer it to. What you make may not be what you are selling. To decide what you are in fact making you should think about why they buy from you. While thinking about “who buys from you,” you must think about who is responsible for the financial success of your enterprise.

This definition of your business, formulated in terms of what you produce for whom, will be the basis of your strategy. While writing your strategy, you will progressively refine your ideas in terms of whom you are targeting with your offer and what it is you are offering them, until you reach a specific segment and a specific offer.

Defining your business in terms of what you sell to whom is not sufficient to succeed. The way you define your business determines whether the business is likely to earn you more money than the amount your competitors are earning. Thus, a good business definition is one which enables the business to make more money than its competitors.

A good business definition identifies a market for the enterprise where its bargaining power is likely to be maximum so that the business can make more money than its competitors. With this in mind, ask yourself the following questions:

• Have I defined my business so that I am not one amongst many like myself?
• Who are my (potential) buyers?
• What do I really know about them?
• Why are they buying from me and not from my competitors?
• To which type of buyer does my enterprise owe its financial well being?
• What should I really offer them? Do I have too many competitors?
• What bargaining power does my enterprise have?
• Can I negotiate with my buyers from a position of strength?
• Are my competitors threatening my enterprise?
• Can I redefine my business so as to avoid surrounding myself with too many competitors?
• If I redefine my business, what should my enterprise make?
• To whom should my enterprise offer what it is making?

Think about all these questions. If you are not satisfied with your business definition, it is time to study the competition. You want to be able to distinguish yourself from your competitors who are out there to get your business. To maximise your bargaining power, you must find a market where there are no competitors, or competition is weak and can be defeated.

A strategy is the positioning of an offer (the mix of quantity, quality, time and cost of a product or service) applied to a market segment.

One of the greatest mistakes made by small businesses is failing to define clearly the market to be served. Making such a mistake is a great loss for a small business since it is specifically small enterprises that are ideally suited to reaching the market segments that their larger rivals either overlook or consider too small to be profitable. The most successful businesses, on the other hand, have well-defined portraits of the customers they are seeking to attract. The effectiveness of their programmes strongly depends on how concise their definition is of their targeted customers.

Often reasons for entering a market are confused with the market definition itself. Suppose a company finds there is a boom in demand for its product in Japan. Or a company decides to target Western European consumers because of their purchasing power. Whilst these are valid reasons for investigating a market, they are not in themselves market definitions.

One essential aspect of defining your market is to distinguish between buyers and users of your product. In some cases the buyer is also the user. However, often this is not the case, as the buyer may be purchasing on behalf of someone else.

Defined markets need to be segmented to reduce or eliminate the alternatives as perceived by a specific group of buyers and potential buyers in your market. A segment is a group of buyers who are similar to one another (and different from the rest of the market) in terms of the problems that they have ("needs"), the benefits that they expect and the similarity of their purchasing habits and product usage (in short, "wants"). The segment is worth targeting if you can meet these "needs" and "wants" better than your competitors. If they are not already met by any other offer, you have found a segment where there is no competition. By finding a segment in which there is little or no competition, you are more likely to become a "preferred supplier".

Market research may help you to collect and analyze the information you need to define and segment markets (see chapter on “Selecting an export market”).

You need to make inquiries about whether you can meet the specific technical and non-technical requirements of your potential buyers concerning your product. Foreign markets differ in many ways to your domestic market to the extent that acceptance of your product can be influenced. Factors that may affect how your product is made and marketed include: climates, sizes of people, space, language, religion, cultural preferences and taboos, standards, income levels, business practices, legal environment, and bilateral and multilateral agreements.

Because of these differences, buyers may expect you to modify your products with respect to its technical and non-technical specifications. Success in exporting strongly depends on your ability to meet these requirements of your potential buyers. Without making inquiries into expectations of the potential buyers you have targeted, your export strategy is incomplete.

For more information on technical barriers to trade, contact the World Trade Organization (WTO) national enquiry points who specialise in different areas as follows:

• Technical barriers to trade - Kenya Bureau of Standards, P.O Box 54974 Nairobi 00200, Tel: 020 6948000/605490, Mobile: 0722 202137/8, 0734 600471/2, Fax: 020 604031, 609660, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website:
• Intellectual property – Kenya Industrial Property Institute, Weights and Measures Building, Kapiti Road, off Mombasa Road, P.O. Box 51648 Nairobi 00100 GPO, Tel: 020 602211 / 606326, Fax: 020 606312, Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
• Trade in services – Ministry of Transport, Transcom House, Ngong Road, P.O. Box 52692 Nairobi, 00100, Tel. 020 2729200, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website:
• Phytosanitary matters – Kenya Plant Health Inspectorate Service (KEPHIS), Oloolua Ridge, Karen, P.O. Box 49592 Nairobi 00100, Tel: 020 884545/882308/882933, Fax: 020 882265, Email: This email address is being protected from spambots. You need JavaScript enabled to view it., Website:

You need to make inquiries about the possibility of adapting the features of your product, beyond what competitor's are doing, to the needs and wants of your prospective buyers to enhance your bargaining position with them. Product features can be discussed under the following headings:

• Physical features (weight, size, colour, ingredients, packaging, etc)
• Extended features
• Price (high-low price)
• Image (country, company, product)
• Distribution (exclusive, non-exclusive, fast, direct, etc.)
• Generic features, the need(s) and want(s) satisfied by the product

Your decision relating to the relative quality and quantity of these features is called the product positioning strategy.

Each of these can be used to increase your bargaining power with your buyers if you can succeed in meeting specific needs and wants of your potential buyers better than your competitors. In that sense, the need and want satisfied by your product is probably the most important element of your product positioning decision.

Delivery is the last stage of the distribution related tasks of the production function. Enterprises can improve their bargaining power by faster and more reliable delivery. Therefore, the way you plan to deliver your product is an important decision to be made before exporting.

The details of the actual delivery commensurate with your strategic decision can be worked out later once you have a clear written description of the delivery strategy you would like to follow.

Often the traditional modes of distribution i.e. through wholesalers, retailers, or a combination, etc. are the first to come to mind. However, while designing your strategy, evaluating alternate modes of delivery to improve your bargaining power are essential. For example some enterprises seek to improve their bargaining power by using courier service, the internet, direct mail, etc.

The image of a product is a composite of how the product, the producer and the origin are perceived by the buyers. Sometimes the origin of the product works for you, sometimes it may work against. For example, while an industrialized country may enjoy a favourable image as a source of electronic equipment, Kenya may not. Certain companies enjoy favourable images which make the acceptance of their products in foreign markets easier; Microsoft is a good example.

Naturally, the way your product is positioned, that is, how its physical features, price, distribution and the need it satisfies are combined, will be a factor affecting how it is perceived by the buyers.

One must also identify weaknesses related to country of origin, company and product images and plan to capitalize on the strengths.

While designing your strategy, pricing decisions are often confined to a choice between "low" and "high". At this level, one should decide whether one wants to be a "low cost" supplier or "a high end" one. The notion of a "low cost" supplier is probably clear. However, often small and medium size enterprises do not consider the possibility that they can compete as high-end suppliers, that is, competing with high prices.

Naturally, a high price needs to be justified on the basis of other factors which will increase your bargaining power. Factors such as the features of your product, its distribution and delivery, its image and the image of your company, or the services you provide can compensate the disadvantages of charging a high price.

Once you decide on your pricing strategy, in calculating your prices you must take various factors into consideration. These factors include:

• Internal factors (constraints dictated by conditions in your enterprise and product)
  -direct and indirect costs of the product
  -comparative product features and overall quality
  -product life cycle
  -current profit levels
  -recent price history and trends in the domestic market
• External factors (constraints by the environment in which you are doing business)
  -accepted mark-ups in the target market
  -tariffs and taxes
  -your competitors' pricing policy
  -inflation and possible currency fluctuation in the export destination
  -'anti-price-dumping' legislation in the country of export
  -government and industry performance standards in the country of export
• Market factors
  -elasticity of demand of your product in the target market
  -your projected target market share
  -feasibility of price discrimination in the target market
  -availability of substitutes in the target market
  -customer attitudes toward price in the target market
  -size and growth trends of the target market
  -density of the products on the target market

You are now ready to justify your export strategy in a plan.

Why plan?

The most important reason to plan is very simple: If you plan your export venture with care, you have a better chance of success in your target market. Conversely, a business that does not plan will almost certainly fail. And in the worst case, such a failure can bring down the business’s domestic operations.

Financial institutions and other lending agencies know this and will not provide funds to a business that lacks a well-developed export plan. At other stages of the export process, potential partners and investors may commit themselves only if your plan clearly sets out your objectives along with the processes and resources you’ll use to achieve them.

In other words, you’ll get nowhere without an export plan. Your export plan should clearly articulate and justify:

1. Which product/s are to be selected for export development?
2. What changes, if any, must be made to the product/s for the export market/s, to ensure that they meet international requirements?
3. Which countries will be targeted for sales growth, remember it is better to look at two or three markets initially as acquiring market information may be costly and time consuming?
4. In each country, what is the basic end user profile?
5. What marketing and distribution channels should be used to reach these potential end users?
6. What special challenges pertain to each market (competition, cultural differences, import controls, technical requirements… and how will these challenges be addressed?
7. How will you calculate the export price of your products?
8. What operational steps need to be actioned and by when?
9. What personnel and company resources will be committed to the export drive?
10. What are the costs, in time and money for each?
11. How will results be assessed and used to update the plan?

An export plan is really just a business plan that focuses on international markets. It identifies your target market(s), export goals, necessary resources and anticipated results.

Your export plan should contain the following:

1.Introduction	business history vision and mission statement purpose of the export plan international market goals short and medium-term objectives for exporting location and facilities
2.Organizational issues	management staffing level of commitment by senior management relationship between exporting and other operations corporate experience and expertise in exporting strategic alliances labour market issues
3.Products and services	description of products and services key features adaptation and redesign required for exporting production of products and services future products and services comparative advantage in production
4.Market overview	market research political environment economic environment size of market key market segments purchase process and buying criteria description of industry participants market share held by imports tariff and non-tariff barriers industry trends and other market factors market outlook
5.Market entry strategy	target markets description of key competitors analysis of competitive position product positioning pricing strategy terms of sale distribution strategy promotion strategy/development of sales leads description of intermediaries and partners
6.Regulatory and logistical issues	intellectual property protection modes of transportation and cargo insurance trade documentation use of trade service providers
7.Risk factors	market risks credit and currency risks political and other risks
8.Implementation plan	key activities evaluation criteria and process
9.Financial plan	revenues or sources of funding cost of sales marketing and promotion costs