Five Key Considerations When Entering a New Market
Entering a new international market makes sense for many companies, on a number of levels. Yet, too many of those efforts fail. Variables like demand, audience and competitive landscape can all make or break the effort, helping you unlock new revenue streams or go back to your original market with the proverbial tail between your legs.
The difference between success and failure in this situation tends to revolve around how strategic the approach is. A well-prepared company entering a new market or seeking international expansion with a comprehensive plan to unlock it based on a good understanding of all related variables tends to succeed. That, in turn, requires some important pre-work and considerations to determine whether a new market entry is the right strategy, to begin with.
Fortunately, those factors actually tend to be relatively straightforward. Consider these five steps and variables before building a more comprehensive expansion strategy for a new market.
1. Research the Market Environment
Knowing the basics about the new market you're about to enter is a core requirement for any type of strategy. It sets the foundation to ensure that once you're ready for strategic specifics for company growth, everyone is on the same page and able to make sound, fact-based decisions. Understanding the new market environment includes a few factors, including:
Basic geographic, demographic, and political information, which you can gain from credible third-party sources like the CIA World Factbook
The competitive environment within the market, including both direct and indirect competitors for the brand and/or product with which you would enter it
Languages spoken within the new market, including potential country-specific nuances (like a different regional dialect of the language spoken in a specific country)
Currencies used, and audience preferences on how to use those currencies—from cash to credit cards and digital wallets
The information gained through this step can become especially valuable once you begin to evaluate it more deeply in preparation for your market entry, especially with globalization in mind. For example, basic geographic facts about a market may lead to important insights related to supply chain management later on in the process, while currency preferences may define the way you set up your online store.
Put differently: the more background information you gain early on, the higher your chances of building a strategy that considers all of that market's unique features.
2. Consider Local Nuances Within the Market
Of course, simply understanding the market on a broad scale doesn't tend to be enough. As anyone familiar with new market entry strategies knows, plenty of nuances exist within that broader market that have to be part of the consideration set when building a comprehensive, strategic plan.
Those nuances within a market typically come in two shapes that exist alongside each other and both deserve equal consideration:
Individual and regional differences within the new market. For example, Northern Germans are well-known for their reserved nature, while Southern Germans are known to be more outgoing and easy to approach. This type of information will become essential when looking to segment the market, as described in more detail below.
Subtle cultural differences below the surface differentiate the market from others. For example, Germany and Austria are widely known for having similar cultures. However, Germans tend to be more straightforward and direct in business contexts than their southern neighbors, an important consideration when building local partnerships.
To be clear, this is not an either/or situation. Most markets exhibit both of these nuances, which have to be considered as part of a broader evaluation of the market you're about to enter. Understanding them is vital to building a comprehensive and successful strategy, not least because it allows market entrants to create more targeted and effective localization efforts.
3. Build Research-Based Audience Profiles
All the insights in the world matter little when they can't be condensed into simple overviews, built on credible research and facts, that are easy to understand and digest for all stakeholders. When entering a new market, that process should include building audience profiles that outline exactly who the brand and product will target upon market entry.
Many brands use data-based audiences and customer personas for that process. As fictional representations of a brand's ideal customer, personas can play a significant role in making the potential target audience in a new market more "real" and approachable.
Customer personas tend to include syntheses of basic demographics, but also typical motivations, needs, and behaviors that might be important for any marketing and communications efforts. They're always based on research, focusing on tangibles over assumptions to ensure their usefulness.
When built the right way, these personas become essential shortcuts when planning market entry and marketing efforts. The quick and digestible information can help everyone on the team understand exactly who to reach, and how to best reach them.
4. Analyze Relevant Communication Channels
Your market and audience research has likely uncovered some of the most common channels that individual members use to communicate, both with each other and with brands. The next step is a closer analysis of those channels and how they might be used to break into a new and unique competitive environment.
For example, the Asia-Pacific region is currently home to almost 3 billion social media users. But residents in different countries use very different channels, from WhatsApp in India to Weibo in China. Understanding both the basics of those channels and their nuances and different requirements in getting your message out is crucial to making an impact, from the moment you begin talking to your audience.
Even countries that use similar channels to your home market deserve a deeper, more focused analysis. For example, European data privacy laws have made Facebook a very different type of network across the Atlantic compared to the United States. Users are less likely to share private information, making it more difficult for brands to build targeted ad campaigns.
Once you dig deeper, countless similar examples exist. Different audiences use different channels to shop or communicate with each other, and even use social media for fundamentally different purposes. The better you understand these nuances early on, the more likely any communications and promotional strategy will be to succeed.
5. Segment the Market as Needed
Finally, don't be afraid to segment your market into individual areas that deserve a more nuanced strategy. Market segmentation when executed the right way can go a long way to ensure that your product, brand, and messaging have the most possible impact as you look to unlock new revenue streams.
Market segmentation, especially when built on sound research and clearly distinguishable differences, can go a long way towards determining your market expansion strategy. Different segments may require different strategies, priorities, or allocations to optimize their opportunities. Evaluating potential segmentation opportunities early can lead to a more strategic approach in attacking one or more of these segments.
Preparing for Market Expansion With Strategic Foresight
No strategy appears out of nowhere. Instead, every strategy needs a healthy amount of legwork and preparation, all designed to maximize its effectiveness once put to paper. When expanding to a new market or thinking about globalization, those considerations focus on research, ranging from basic facts to audience and channel-specific insights.
None of that process for company growth, of course, should happen in isolation. Connecting and networking with other professionals familiar with the same market can go a long way towards building a better, more comprehensive, and sustainable international expansion strategy. Connect with Think Global Forum for more insights and connections with thought leaders and other professionals in your area.