In my blog Choosing the Right Market: Four Pitfalls to Avoid, I covered some of the key mistakes that people make when it comes to choosing an international market to expand a business to.
Because of the political, social and economic volatility that rocked the world in 2020, making smart choices on market selection is more important than ever. So how do you get it right?
In a word, “research”. Choosing the right market isn’t rocket science. It takes some time and effort, but if you do your homework before you reach any conclusions about which country is right for your company to expand to, you’ll be in a much better position to know that you’ve made the right decision when the time to choose comes. Here’s why.
Real data and evidence-based decisions
Decide how to choose
Do your research
You might be wondering
“What is the minimum amount of research that I need to do?”, but a better question is
“What is the minimum I need to know?”
The most important question that you need to be able to answer is “Will people in this country buy what I am selling?”, but there are some other key considerations that you should also take into account as you go about selecting a market to sell to.
What is the 30,000 foot view?
To get an initial idea of which countries are the best candidates for you to consider as destinations for your international expansion, you should consider:
Once you’ve answered these questions, you should have a group of markets that you can choose from.
For each of the markets that you think you want to go to, answer these questions:
1. What’s the size of the opportunity?
You also need to know whether people in your target country can afford your products and whether they are likely to pay a premium for them. The answers to these questions are linked to the levels of income in your chosen country, region or area, so it’s helpful to gather information on how much the average person in that country earns, how much the customers you are targeting earn and what people in that country typically spend their money on.
2. What about the demographics?
3. Who is our competition
Before you draw a conclusion about which country is the right place for you to start your international expansion, you need to get a handle on the competition.
A good place to start is by finding out whether your competitors in your home market are working internationally and where they are selling to. If you can find out how they are performing in that country, even better. Their website, press releases and business news should give you some clues. Then you have to decide whether you want to compete with them, or choose to develop your business in another country where they haven’t established a base.
It’s likely that aside from the competitors you’re already aware of, there are a whole lot of competitors out there that you haven’t even considered. These companies might be local, or they might be global operations with a foothold in the country you’re targeting. You need to understand who these competitors are and assess what kind of threat they pose to you. This is significant because if you’re thinking of entering a particular market and it turns out that there are numerous competitors already selling the same thing as you, you may be in for a tough time. This can be true even if your product has features that you believe really differentiate it from competitor products.
If you discover that your preferred country already has a number of competitors playing in your space, you’ll need to think long and hard about whether you are offering anything unique or different to the competition. You also need to consider how you’ll capture market share, as it can be difficult to win customers away from competitors who are already providing a good product or service.
Once you have a handle on the size of the opportunity in a country you’d like to sell to, the next question to ask yourself is:
And in the next piece in this series, I’m going to do a deep dive on understanding barriers to international market entry, and what they might mean for you.
Whether you’re choosing your first international market or leaving the China market and aiming to make smart decisions on market selection, don’t miss our one-day masterclass, Choosing the Right Market in 2021 – Where to after China? We’ll be running a virtual session on 3rd & 4th March, or an exclusive in-person event in Sydney on 12th March – register here.