“Know Before You Go” – 7 Reasons to Start Your International Expansion with Market Research
When you're getting ready to expand your business overseas, it can be really tempting to skip the market research and just get down to it. I get it. Spending hours trawling websites for statistics, or reading reports during your weekend is a little lacking in glamour. Even investing time in travelling to a new country just to check it out might seem like a whole of effort for little return. Frankly, it's more exciting to jump in and start selling than to do all that work.
But the investment into market research before you start selling internationally is worth it. I'll even go out on a limb here and say that it will reward you ten fold. Here are 7 reasons to support that claim.
Research helps you narrow down your focus to certain areas
Executives and business owners often think about overseas markets in vague regional terms (e.g., “We’re shifting our focus to Asia,” or “We’d like to double our growth in Europe”), but this oversimplification is problematic. Ask people what they mean by “Europe” and you’ll get widely varying answers—Western Europe, the European Union, the euro zone, and so on. Starting your research on the places you could go will help you focus on where you should go.
You'll get a good feeling for the market before you start selling there
It seems trite to say it, but if you don't research countries before you start selling to them or working in them, you really won't have a clear idea of what you're getting into. Research (qualitative, quantitative and in-person) helps you to understand the dynamics of the market, and assess its size and potential for growth.
You'll be sure that your product will fit ... and that the customers are willing to pay
Companies that have a product or service that sells well at home often assume that the appeal in international markets will be just as great and that this "under-served" market will be a bonanza, requiring only a small investment in sales and marketing. The painful lesson that many companies learn at great cost is that their product or service doesn't fit the market, or even more commonly, that the pricing is way out of line with what clients are willing to pay. Adequate, objective market research can help avoid these pitfalls.
Identifies the competition
If you start selling without market research you won't know what kind of competition you're up against and whether you can compete with them. It's important that you identify competitors in market including local producers or services providers, as well as major international competitors. Once you've done that, you can work on understanding your competitors' strategies ... and how to beat them.
Reveals hidden costs
Failure to account for all the costs of operating in a new market can cripple an otherwise successful international expansion campaign. Local expenses may include higher taxes (such as VAT), company registration and set-up fees. For example, whereas setting up a company in Australia costs around US$385 (AUD 514), doing the same thing in Dubai could set you back anywhere between US$7,000 and US$16,000 (AED 25,000 - AED 60,000, depending on how you do it.
Often, these unaccounted for expenses deplete the anticipated profit margins, based on domestic sales and marketing models. It is crucial that you understand the true cost of doing business in a new market so that you avoid dangerous miscalculations about the true financial opportunity available.
What can I say? Information is power ... the more you know about where you are going and who you are selling to, the better you can plan and the fewer unforeseen risks there will be.
And if you're still not convinced, I leave you with this: Knowing more about the new country that you plan to operate in or sell to will increase your confidence by making you familiar with it.
Are you keen to take your business global? Visit the Global Entrepreneur Awards for your chance to win a fully-funded, 12-month place on our International Business Accelerator - entries are now open so apply today!!