Taking your business to a new market can be exciting and daunting, particularly if you’re experiencing rapid growth in Australia. There is the promise of larger overseas markets like China or the US, but rushing in without proper market research can lead to costly mistakes, false starts, inefficient marketing spend and wasted effort.
Despite local success, many businesses venturing overseas struggle to establish a foothold in new markets. So, what can you do to not become another statistic and ensure long term success?
The Three Critical Export Watch-Outs
When we work with exporters, we consistently see three common pitfalls:
- Making assumptions and relying on gut feel – Thinking you know a market without hard data. Many feel like they ‘know’ the US due to media exposure and being a Western culture. But there is a reason why they say the US is 52 mini-countries in one.
- Replicating the same marketing strategy used at home, assuming it will work elsewhere. Each country has different shopping habits, buyer personas, ways of doing business and cultural norms. Understanding these dynamics before you invest in sales and marketing will give you a solid head start.
- Not validating product-market fit in the target country. Will people buy your product or service in that market? What is their price sensitivity? How does it fit within the competitor landscape?
As one business recently discovered when expanding their SaaS solution into the Australian construction industry, proper market research revealed specific serviceable obtainable market (SOM) opportunities they would have otherwise missed. The research identified target audiences receptive to new technology and validated the level of appeal for their proposition in both commercial and residential construction sectors.
Global Research Delivers Measurable Advantages
Quality market research helps you scope offshore opportunities, assess risks and barriers to entry, gain industry insights in your target market, identify the ideal port of entry, and model the cost of doing business.
Consider the case of New Zealand children’s brand Honeysticks, which sought to grow its market share in the US and move out of the Amazon eCommerce environment. Through in-market consumer quantitative research, they identified and sized new opportunities to diversify their product range, understood how their product and brand was positioned in the US and strengthened their customer base while staying true to their principles.
From TAM to SAM to SOM
Before investing in expansion, understanding the market sizing framework is crucial:
- TAM (Total Addressable Market): How big is the largest possible market for your product/service?
- SAM (Serviceable Addressable Market): What proportion of that market fits your product/feature/service?
- SOM (Serviceable Obtainable Market): What proportion of that market can you realistically reach?
This approach is used by our client Xero, a cloud accounting software company, to identify specific SOM opportunities in the US and target audiences open to adopting new technology. Whilst Xero is a household name in Australia and NZ, they have to operate like a startup when tackling the US.
Smart Expansion is About Informed Moves
“Don’t risk going on ‘gut feel’ and getting it wrong!” This principle has guided numerous successful international expansions. Companies that invest in understanding their market before entry consistently outperform those that rush in based on assumptions.
Remember, a great strategy is key to success in global markets, but too many companies start with plans based on superficial research, guesswork, and ad hoc decisions. They invest time and money in markets which will never generate the returns they hoped for.
Thorough market research isn’t just a nice-to-have – it’s the critical first step that can mean the difference between international success and becoming another cautionary statistic.
