The state of commercialization in 2019: commercial expertise grows with international experience
TL;DR: Unique products or services encourage Finnish companies to internationalize, according to a recent study on commercialization carried out by Proof .
Internationalization drives commercial expertise
The commercialization expertise of Finnish companies grows stronger as they are exposed to longer and fiercer international competition, according to a recent study by Proof Advisory. The State of Commercialization 2019 study focused on senior management at B2B companies, in cooperation with the Helsinki Region Chamber of Commerce. Commercialization refers to the planning and implementation of the launch of a new product to the market.
Of the companies that responded to the survey, 45% operate internationally and 6% had previously operated in international markets but have since withdrawn. 30% of respondents operate only in the domestic market. It is significant to note that 17% of respondents plan to internationalize.
Three groups of traders
We identified three groups that stood out based on their experience of international operations: experienced traders (30%) that have reported purposeful growth over time in export markets, strugglers with less experience (57%) and enthusiastic beginners (13%).
– “It’s promising that companies just starting internationalization show strong confidence in their own expertise, although they face challenges”, says Johanna Toivonen, Senior Advisor at Proof Advisory .
The commercialization skills required to enter international markets are only learned by going to the international market.
– “However, taking the first steps requires courage and clear growth goals”, Toivonen continues.
The goal of additional sales and a larger market
So what do companies typically aim for through internationalization? According to the study, companies are primarily seeking growth outside their smaller domestic market. Additional sales (46%) and an attractive growth opportunity (44%) are also contributory factors. 41% of respondents mentioned the small domestic market as a factor that accelerates internationalization. A product or service that is perceived as unique also encourages internationalization (36%).
Reducing production costs (7% of respondents) and taxation, on the other hand, were not strong factors compared to other issues.
The bottlenecks are expertise and reliable target market insight
According to the companies that responded to the survey, the biggest barriers to commercialization are finding the right partners (54%), finding the best human resources (54%), building sales and service channels (49%) and standing out in the market (47%).
This is highlighted by Elina Björklund , CEO of the children’s clothing brand Reima, who became thoroughly acquainted with the study.
– “The study highlighted the key issues of international growth: the ability to network and find the best partners. We have been doing this for years and it has not always been easy. Of course, mistakes have been made, but we learn from them”, Björklund says as she sheds light on Reima’s situation.
According to Björklund, international success is about embracing the market itself, trying to think like the locals and operating in the local business environment and culture.
According to Björklund, developing understanding of customer insight and the customer experience has become one of the most important levers for Finnish companies, that no company looking for growth can afford to ignore.
– “At the same time, we must remain loyal to the global brand. Digital is at the heart of it all. The issues presented in the study are important to all of us”, Björklund concludes.
Do companies need support to overcome barriers?
The most significant challenges around internationalization were legislation and regulations in the target market (48%), identifying the right market (41%) and adapting the business model to the target market (40%).
– “It was surprising that only a few respondents said that they needed more public sector support, which often comes up for discussion”, Johanna Toivonen says.
Proof Advisory focuses on commercialization, productization, internationalization, sales and marketing expertise for B2B companies. We believe that a significant part of R&D resources and investment is wasted and this affects companies’ growth, earnings and profitability – and thus also affects the national economy. This is what Proof aims to change.
The State of Commercialization 2019 survey was conducted during October – November by Proof Advisory in cooperation with the Helsinki Region Chamber of Commerce. There were a total of 155 respondents in the B2B web panel. In addition, 10 in-depth interviews were conducted. Proof Advisory is a commercialization partner serving B2B companies and is part of Salomaa Companies.
You can download a summary of the key findings HERE