Keep Plugging Away With Your International Marketing Campaigns

This year’s U.S. election campaign has begun echoing the core economic theme from Bill Clinton’s successful 1992 run for the presidency – “it’s the economy, stupid.”

Meanwhile, second-quarter results from major American companies underscore my long-term advice on how to recession-proof your business – seek opportunity abroad while the U.S. economy is in the doldrums.

Scan the financial pages of your favorite newspapers and you’ll read the same “international growth, domestic weakness” story over and over again:

• Caterpillar. Sales volume was up $787 million, with most of the gain coming from outside the United States. Sales increased in Africa, the Middle East, Commonwealth of Independent States, Latin America, and Asia Pacific—there, sales were up 50%. The company said strong growth in emerging markets offset weak sales in North America, Europe and Japan. Its percentage of sales and revenue outside North America grew from 55% to 60% compared to the same quarter last year.
• DuPont. International sales are up 18%, compared with a 5% domestic increase. DuPont has ridden the wave of global agricultural sales with its genetically modified seeds and other agricultural offerings. However, its sales of residential construction products like Corian and Tyvek dropped with the decline of the U.S. housing sector. DuPont operates in nearly 80 countries and last year netted 60% of its sales to customers outside the United States.
• General Motors. GM boasts 10% sales gains internationally, including 20% in the BRIC countries: Brazil, Russian, India and China. However, those results couldn’t offset a 20% decline in North American car, truck, and SUV sales, so the company’s global numbers slumped five% for the quarter. Across town, Ford announced that it earned profits in every region except North America.
• IBM. The Americas were up eight percent over 2007; Europe, the Middle East, and Africa (EMEA) grew 20%; Asia Pacific (APAC) increased 16%. Currency adjustments devalued these increases, but in total, IBM’s worldwide income grew 22%, with two thirds of its revenue coming from outside the U.S.
• McDonald’s. Foreign sales outpaced American growth. U.S. same-store sales increased 3.4%; European sales grew 7.4%; and APAC and EMEA jumped 8.8%. Australia and China led the APAC improvement. The company also gained from the sale of its share in European fast-food boutique Pret A Manger, a move meant to focus attention on its core brand.
• PepsiCo. PepsiCo International grew over 20% in revenue and over 30% in profit from the prior year. The weak dollar helped PepsiCo sales in the nearly 200 countries in which the company offers products like Pepsi, Mountain Dew, Aquafina, Lay’s and Quaker.

Way back in June 2002, I wrote that planners at successful global companies feel that they’ve done better than their domestic counterparts exactly because they’re international.

Besides being able to sell into markets around the world, global companies can use their multinational portfolios to smooth the peaks and valleys of individual markets.

For example, many large manufacturers find that they must pay close attention to world markets, recognizing that each region comprises a major chunk of their revenue. This way, when the Japanese economy slumps, they might increase their investment in healthier markets like Europe or Latin America that might be firing on all cylinders.

Right now, it feels like the award for “Most Slumping Economy” should go to the United States.

The lesson remains clear: When your domestic customers are reluctant to spend, look for revenue abroad.

Don DePalma is the founder and chief research officer of the research and consulting firm Common Sense Advisory.