Branding Challenges to Expect When Entering a New Market

Globalization has recently opened up countless opportunities for progressive business organizations. Brands can pull from a broader talent pool, leverage a more comprehensive network, and market to more diverse demographics than ever before.

At the same time, companies interested in a global expansion must expect, identify, and meet various challenges when entering a new market. To determine whether to enter a new market, executives must invest in research to evaluate the size of the available market and answer the question: "What would our projected profit be if we entered this market?"

Even after leadership embarks on new market penetration, they must meet several branding challenges. These include the following factors — factors that you also may need to investigate in-depth when entering a new market:

1. New Communication Channels

Understanding communication tools and social channels your target customers use in the new market are critical. For instance, research indicates that almost three-fourths (74%) of consumers rely on social networks to help with their purchasing decisions. However, if your brand is not engaging with those consumers on their preferred platforms, your marketing initiatives may not gain awareness for your brand.

Your organization may need to adapt its marketing techniques to align with the communication and browsing habits of the target populace. For example, penetrating a European market may involve doubling down on Facebook, Instagram, or YouTube marketing while focusing on native Chinese customers may require investing in the extremely popular WeChat.

There also needs to be flexibility when reaching customers via social channels since the landscape is constantly changing. Consider the recent emergence of TikTok as a global social media powerhouse. Of course, it is essential to note that different age groups in the new market will likely prefer other communication channels (e.g., Gen X-ers may prefer Facebook vs. Gen Z-ers who prefer TikTok).

You must be aware of and lean into your target market's various popular communication channels. Only then will your brand make any headway among consumers.

2. Differences in Language and Culture

Perhaps the most challenging aspect of brand expansion, at least in pure marketing, is ensuring that your core message does not get "lost in translation" — either linguistically or culturally. You must adapt your brand message so your target consumers understand it and feel emotionally connected. 

Of course, there are countless examples of companies that should have considered language and culture when entering new markets. For instance, one airline neglected to ensure their translation was accurate for Mexican buyers, so their tagline "Fly in leather" became "Fly naked." A German automaker provoked outrage when it released an ad featuring athletes from the United Arab Emirates who stopped singing their national anthem to run toward the featured car. 

In most cases, only one feasible solution will allow your brand to successfully meet this challenge: bring an expert in the target culture on board (or a team of experts, for that matter). Someone who has a deep understanding of both the language and the culture will be able to advise you on specific terms to use (or avoid) and messaging that will resonate with your audience. 

3. The Details of Your Typical Customer’s Journey

Another challenge is determining a typical customer's journey for the new market. For B2C organizations, the dilemma will center around moving individual consumers through the funnel stages of awareness, consideration, and decision. In a B2B context, the focus will be on identifying the "gatekeepers" for each account (i.e., the people who can introduce your brand to upper management) and the final decision-makers.

A typical customer's journey may look very different in one market compared to another. However, once you understand how to move your prospects closer to a purchase decision, you'll be in a prime position to develop and deploy a comprehensive marketing strategy for the target region.

4. Different Payment Methods and Behaviors

Entering a new market may also require adapting your company's approved payment methods to the preferences of the target populace. Today's consumers expect a smooth and seamless checkout process and brands to present them with multiple payment options. They may only purchase if they use their preferred method.

Take Apple Pay as an example: according to one study, Apple Pay's market share in the United States is approximately 44%. However, this payment method is significantly more popular, in the United Kingdom, with six out of 10 consumers regularly using it for store or restaurant purchases. Therefore, it is prudent for any company seeking to enter the British market to consider offering Apple Pay as one of their options.

In addition to payment methods, pricing is a significant factor to evaluate. Will your target customers be more affluent than customers at home? What is their average buying power? How can you appeal your price points to local customers without eating into your profit margins?

5. Regulatory Barriers

There could be any regulatory barriers for consideration if your brand is to enter a new market successfully. For instance, ensuring compliance with payment processing standards that apply to the local area is essential. Will customers be willing to purchase your brand without protocols like Strong Customer Authentication (SCA)? What validation methods will you need to institute for protection against consumer fraud? 

Other regulatory issues could be challenging if your brand sells a physical product. What are the shipping rules and restrictions in the new market? Are there additional tariffs and taxes of which you should be aware? Which days of the year are considered bank holidays?

It is crucial to understand how many obstacles your brand will have to go through as it enters a new market and how much of that regulatory compliance will cut into your projected profits.

In summary, there are several branding challenges that you should expect when entering a new market. While the exact difficulties may vary from one business to the next, it is vital to exercise forethought, identify potential obstacles for your brand, and examine different paths forward.