Your web page is getting traffic from different countries, your social media account gets more and more international followers or there is no interest yet but your business has the power to create that interest. So, what will be the next move then? For a company, the market expansion is the key to reach the next step of growth and have global brand power.
Once you’ve measured whether your business is ready for international expansion, it’s time to make some choices. During the selection of the market, there are many important points that can determine the result of the process. Thus, the expansion into new markets needs a clear and defined strategy. The first component of this strategy is selecting the market. Needless to say, careful and comprehensive research is needed for the appropriate market selection.
The first step of this selection process requires the identification of suitable market options where the company can operate. The identification process is the evaluation of the different markets with certain well-defined criteria, given the company resources and objectives. The aim is to match the right product and services with the right market between the identified suitable choices.
This process allows you to analyze the potentials of various foreign markets and their marketing environments. Some markets may not provide the right opportunities for some products for different reasons or the resources of the company may not be compatible with some other markets. Companies need the right selection process to reflect their potential.
Three pillars of the market selection
One of the important points that should be considered at the very beginning of the process is whether the industry is compatible with the market. The status of the industry in which your company operates in the target region should be checked. Which industries are rising in this market? What are marketing environments from the political, social, cultural, and legal aspects? The value and potential of the market can be learned by searching for answers to these questions. For instance, if you are operating in the FMCG industry, you need to analyze what are the volume, strength, and future projections of the industry in the region you target? If you can see an industry presence with the necessary potential, you’re good to go!
The next step after checking the compatibility between the market and the industry is the compatibility between the segment and the market. It is time to focus on your target segments and check if there is a demand in the market. Now you know that there are potentials and opportunities in the industry that will interest you, but what about your target segment? Let’s continue with the FMCG company example and assume that your company operates in the FMCG industry and sells products that appeal to the luxury segment. What is the size of the luxury consumer group in this new market; what are their preferences and behaviors? Is there a demand for your product in this specific segment or can it be created?
Therefore, this process requires a company to know its customers, identify what is needed in its segment and determine how it can best meet those needs with its product or service to stand in this market. It is important to test if the product attracts the required number of customer groups.
After testing the compatibility of the industry and segment in the target market and seeing that your brand fits, do not think that your work is done. For evaluating the potential in a market, another critical factor that should be considered is the competition. The company should analyze its main competitors, their economic progress, and sales volume throughout the years. Also, it is important to spot the differentiating points of your competitors such as prices, market maturity, financial position, development plans, and expansion strategies.
In addition, the company needs to look at the past experiences in its segment. Is there a company that has been successful in this field before? If the answer is no, the next step will be to determine why they all failed and build up the right strategy. Or, if there are successful examples, the potential and strength to compete with these examples should be identified.
Analyze, identify, prioritize
As a result of all these processes, the market prioritization decision comes. The company should determine the most suitable markets by analyzing the factors and comparing the regions in terms of different aspects. You need to prioritize among these suitable markets and rank them in terms of cost-efficiency and return. Market assessment and selection help you to draw a path to the global expansion’s first miles. After these first steps, creating a comprehensive market entry strategy awaits you, as a challenging task. However, we will examine the details on market entry strategies in another content.
All of these processes that we’ve mentioned above are crucial for a company that needs to know where it makes the most profit, where it attracts the most customers, and where local factors affect the business most.
It could be a challenging and complicated task to complete all these analyzes and determine what is best for your company on your own. However, do not see this as a problem, let us introduce you to the Inveon GrowthLab team to carry out this process, which requires significant know-how and detailed analyses. Through their extensive expertise, advanced benchmark analyses and strong global experience, Inveon’s digital growth management solution GrowthLab team is here to help you to take the next step.
We are here to help you to expand and reach the next level of growth.