Expanding your business into a new geographical territory is exciting as well as daunting, but where many organisations come unstuck is in treating it as a carbon copy of their existing business. Market expansion into different countries can be an excellent way of growing a company, but when it comes to choosing where, when and how, the key is in the research, planning and strategy.
While some businesses make a particular plan towards market expansion overseas, for many established organisations, it begins organically. Perhaps your product or service has gained a reputation, both digitally and in general, and you're finding that you're getting enquiries from a different part or parts of the world. At some point, that likely sparks the question as to whether you should pursue that market more consciously by investing in marketing, perhaps dedicated sales teams and even a regional office.
Is your business proposition relevant in your chosen market?
As you're considering market expansion, let's assume that your business model is robust in itself. Most businesses do not give themselves the time and space to view it in the context of the new market. Your business needs to be analysed under the microscope of a PESTEL analysis, considering the political, economic, sociological, technological, legal and environmental conditions in that region that might affect what you do, how you do it and the likelihood of success should you choose to continue.
For example, if you are looking at expanding into the Chinese market, they have a very different legal system to European, UK or North American jurisdictions. Every company in the US seems to have a lawyer on call. Every country has a unique country risk, and even with that assessment, things can change dramatically, as noted during the past ten years in the US, the UK and Hong Kong.
How big is the market, and does it warrant market expansion?
It would be best if you got as specific as possible to understand the total addressable market (TAM) in your new territory. You may already be familiar with market segmentation in your home market. This process needs to be appropriately applied to understand exactly what the opportunity is and if it's different from the perceived one.
For example, India's market is often considered huge because of the vast population of 1.3 billion, but of course, that doesn’t represent the TAM. t. If you're in the food and beverage industry or selling an everyday essential like toothpaste, then the opportunity may be significant. Still, if you're selling a premium product like designer handbags, the opportunity may be disproportionately small.
How different is the target audience?
Never underestimate the importance of cultural differences. What's considered polite in one country may be profoundly rude in another. Values can vary enormously, and some things that are very important in one place are negligible in others. You cannot make assumptions that a particular demographic will respond to you in the same way in a different country.
In addition to giving you an insight into your company's future success and relevance in a different part of the world, it will also help you understand how you will approach that market as well. One of our team's strengths has always been the number of people who have worked internationally - not merely for a few days here and there but also living and breathing a different culture for years. They are marketing experts with unparalleled depth and breadth of experience.
Have you done a competitor analysis?
It's not just your customers who are different in other parts of the world, either. You will have a different set of competitors, of whom you could be completely unaware. A combination of careful informal research and more in-depth analysis of who is in the market already, what they offer and what that means for you coming into that space is essential for understanding the challenges and opportunities. It will also help you get a sense of whether you have the necessary resources to be credible in a new market against established players. Considering this as part of a SWOT analysis (strengths, weaknesses, opportunities and threats) will help to clarify your position and the work you need to do.
Does your brand relate to your new potential market?
If, after all of that, you still think market expansion into your chosen territory is worthwhile, it's time to do a brand check. Ask yourself how your brand relates to this new territory. Does it communicate in the same way as it does at home? Is your brand name pronounceable overseas? Does it sound like a different word in the local language? If so, what does that word mean? Does your design translate, or is there something in it that could offend? Checking your brand against cultural sensitivities, competitors, and other socio-political factors is essential for ingratiating yourself and avoiding embarrassment.
For example, Braniff International Airways got into trouble in 1987 when it promoted its new leather seats south of the border with the same campaign in the United States. The "fly in leather" slogan translated to "vuela en cuero" in Spanish, which was appropriate throughout much of Latin America but had different connotations in Mexico, where the expression also means "fly naked". It wasn't exactly the impression they were aiming to make.
How are you going to approach market expansion?
Next, it's time to start thinking about how you're going to achieve market expansion in relation to your knowledge acquired from your processes so far, which are essentially equivalent to a market readiness analysis. This can involve some essential items. For example:
- Do you need to set up a new company or a subsidiary?
- Do you need a local office?
- Do you need boots on the ground?
- How important is it to make sure you're registered and trademarked in the new market?
- Does your pricing strategy need to be different?
- How are you going to provide customer care and support?
How important is it to make sure you're registered and trademarked in the new market? Does your pricing strategy need to be different? How are you going to provide customer care and support?
In short, market expansion is an exciting prospect and can be a game-changer for its profitability and credibility. However, if it isn't done correctly, it can be an expensive exercise to get wrong. It's ultimately better to invest in researching and finding out whether a market is suitable for you than to risk reputation and resources on an unsuccessful venture. For advice on where to start, we recommend speaking to someone with international market expansion experience, ideally with local knowledge of your chosen market. Perhaps a CEO Whisperer or a fractional CMO?
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