Entering a new market will give your company increased reach and profits. However, the process can be complex, and expanding into an existing business ecosystem brings new challenges and complications.
Responsible managers develop the company’s portfolio by expanding into new markets. It can be a risky move. On occasions, it may look like a David against Goliath struggle, especially when encountering a well-entrenched competitor on his home territory. But at the same time, if properly implemented, it can massively grow your revenue.
To navigate the barriers, you need the right development strategy to help your company position itself in a new market.
No matter the niche your business is, several principles apply when growing your reach. I want to share five proven strategies that will guide you in positioning your product successfully into a new market.
1. Define Your Goals
The first step in formulating a game plan is to determine the goals you want to achieve in the market. By clearly articulating what success looks like, you will be able to focus on the rest of your planning.
Your goals need to be both reasonable and measurable. Some of the points that need to be on your drawing board are:
- What is your timeframe for launching the product?
- The target level of sales?
- Budget and other resources?
- What is the market share you seek to gain?
- What will the expansion contribute to the brand value?
2. Research and Understand the Market
Understanding your market may seem like a simple step. But sometimes, it is not easy to look past one’s perceptions about the needs of the consumers. The reality is victory goes to whoever understands the customer best.
Knowledge like demographic info, location, and preferences of your target customers, are vital metrics. It is crucial to identify the group that needs your product.
For example, Coca-Cola’s strategy focuses entirely on consumers and what they want from beverages. As tastes change, like the trend toward less sugar, Coke supplied that demand. Their product didn’t change drastically. It was modified to keep up with current trends. Adapt your product to the local cultural preferences. MacDonald’s is known for its Big Mac, but their franchises menus often reflect the local cuisine.
Expanding into new markets, especially international ones, demands a great deal of research and analytics. You will want forecasted demand and potential barriers to entry. This is important if you are planning to enter a relatively undefined market.
3. Select the Suitable Mode of Entry
You may need to define the best way to get your products or services to market. Do you sell directly, or do you work with intermediaries? And even if you sell directly to a target end-user, do you require the help of an in-country sales agent to facilitate sales.
Apple is a global tech giant, but internationally it doesn’t have a branch office in every corner of the world. It finds trusted distributors and partners with them to resell its products in the local market.
Sometimes local laws make it hard for a company to put down roots without local support. Yes, you have to share a percentage of your profits, but the upside is you don’t invest in local infrastructure. And because partnerships are temporary, you can always move to a different distributor if you think you can get a better deal.
You can choose from several options.
- Using in-country distributor.
- Acquiring an existing local business.
- Franchising, licensing, and cross-manufacturing.
- Register a new company locally and open a physical presence.
- Sell online through your e-commerce site.
- Selling through another company that exports your products or uses them as components.
4. Outperform the Competition
It is important to study existing businesses in your new market. Understanding your competition, value proposition, and offer will ensure that you know the market and the environment you will need to compete.
Take a page from the Netflix playbook. Its product strategy focuses on margin growth. The company is the leading global streaming service. Their formula for beating the competition focuses on retention. By providing quality content and unlimited access, the company has gained a reputation as a trusted brand. Something that competitors can’t easily duplicate.
Your value proposition, offering, and market strategy need to be strong enough to beat out and establish competition. Suppose the price you offer isn’t better than the competition. Then you will need to focus on creating extensive brand awareness. This is a higher-risk proposition for a business entering a market.
Invest in quality analysis of the business climate in the target market. The data will help you to adapt and improve your product before entering the market.
5. Marketing Campaigns Stimulate Sales
To buy your product, customers need to know about it. Marketing is imperative to create brand awareness and stimulate sales. You can initially use some of the marketing tactics that were fruitful in your original market. For example, if your strategy was to start a podcast, take some time to experiment, and see if the same formula results in the new environment.
Harnessing the power of social media is a must. These platforms enable you to directly contact your target customers, no matter who dominates the market. A recent study found that over 7o% of consumers rely on social networks to help with their purchasing decisions.
Tailor your campaigns to fit the demographic and location context of your strategy. Measure the engagement; that will be a good indication of what’s the interest for your product. Adapt as you gain insight into your client’s preferences.
Preparation Mitigates Risk
Diligent market analysis is required before setting out on expansion. Test the level of responsiveness of the target audience to new brands. Determine if your business model can serve the demands of the new markets.
The strategies I recommend will be a good start in creating your market entry strategy. To make the best decision for your business, you need to explore all of your options. By investing in these steps, you will mitigate the risk increasing your chances of success!
Our guest contributor
Tatyana Artemova is an entrepreneur, mastermind expert, and founder at IStartHub. She writes about business ideas and growth hacks to support entrepreneurs on their business journeys.