Evaluating New International Markets for your Business
As you seek to expand your business internationally, there are two important criteria for judging the potential of a new market: its attractiveness and its accessibility.
Making those judgments requires a thoughtful approach informed by answering questions that can often be quite challenging.
Read on to discover some of the questions you should ask, as you determine which markets to expand into, and when.
Assessing Market Attractiveness
A market’s attractiveness is defined by the likelihood of long-term success in that market, and how valuable it can be to your overall business goals.
When studying a market’s attractiveness, ask questions such as: Is this a profitable market for me? Can I prosper there? Are customers willing to pay for my goods or services?
Here are few other questions to consider:
· What is the size of the addressable market? Conduct a top-down analysis of the size and makeup of possible global markets, or a bottom-up analysis using data from early selling efforts in the market to extrapolate sales potential.
· How much of the addressable market can we expect to serve? Evaluate competitor data and market share to determine whether there’s enough green field for your business.
· Can we build the right relationships with this customer base? Whether you’re a volume business, or more of an investment business with fewer customers but larger, more complex deals, you’ll want to understand the potential for making the right deals with the right number of customers.
· Can we expect repeat business in this market? Acquiring new customers is expensive. Does this new market offer opportunities to have customers re-purchase your offerings, or purchase your other products or services?
Gauging Market Accessibility
A market’s accessibility is how logistically complex and potentially expensive a market will be to serve.
To determine a market’s accessibility, ask questions such as: Is it feasible for me to expand here? Do regulations prevent me from going there? Do I have the logistical infrastructure to go there?
Other key questions to ask:
· Are there significant legal obstacles to establishing a business in this market? Study the market’s local laws, governing authorities and operations of successful brands to understand the local challenges.
· Is the language barrier easy to manage? Make sure to assess your capability to do business in new languages and within new cultural norms.
· Can we afford to work in this market? In some markets, government approval processes can cause delays and require ongoing investments before you ever earn a dollar.
· What will my infrastructure requirements look like? Local partners can help navigate distribution needs, third-party providers and vendors.
Beyond Attractiveness and Accessibility: 4 Key Questions
Once you’ve established a baseline viability for your business in a global market, do a deeper dive into market research. These four key questions can help you evaluate the market more rigorously:
· What is the profile of your ideal customer? If you’re successful in other global markets, what makes those markets viable for you? What do those customers have in common? Can those same characteristics and behaviors be found in new markets?
· Where are your competitors doing business? Competitive intelligence can help you avoid oversaturated and ultra-competitive markets and highlight underserved markets and unmet customer needs.
· What are the current technology trends and influences? Research what current technology advancements and future influences could affect your potential success. Can your company capitalize on these developments?
· How do we plan for the future? Most markets will almost certainly look and behave differently in the future. What economic, political, or sociological changes might affect your business in a year? Five years?
Test, Test, Test… and Localize
After determining a market’s attractiveness and accessibility, the next step is to test the waters.
· Consider the low-cost, low-risk investment of localizing your website and digital channels — such as email and social media — to provide content in the preferred local language.
· Establish distribution partnerships with local partners or wholesalers — or even popular virtual marketplaces — to test product sales.
The best digital translation solutions can help you localize your website and content for omnichannel. They also provide supporting technologies, like APIs, to integrate content into third-party systems and marketplaces, and localize omnichannel assets.
Conclusion
Going global is a big investment in your business. By carefully examining potential markets, looking critically at your own business and competition and running low-risk tests, you’ll be well-prepared to evaluate which international markets will be lucrative for your business.
For more details see: A Primer for Global Business Expansion
