Businesses are ready to branch into new markets once they are well established and flourishing in their home market. The main key to succeed in a new market is ensuring you have a disciplined, well-planned out approach by investing a lot into a complete market analysis. At Blueface, we love to see Irish brands succeed in new markets. However, there are various factors that every business owner should consider before taking the plunge.
1. Choose the right country: Not every country is suitable for your business segment. Studying the country’s GDP and trade patterns gives an idea of the economic situation. The focus of the market analysis should be to derive insights on which country has the highest demand for your product and least supply for the same. Use Google Trends to verify demand in your target market.
2. Check the Cost: It’s always a good idea to check the cost of doing business in your new market. Is your new market drowned in high taxes? It is pivotal to know the amount of capital required to cover import duties, foreign taxes, shipping, insurance, overseas distribution and storage costs. All these costs need to be factored into your entry plan to derive the profit margin and develop a competitive pricing strategy. Obtain measurable benchmarks related to starting a business here.
3. Know the Social and Cultural Factors: Countries are very different from one another in terms of the religion practised, language spoken, social conduct, food and in many other ways. Also, consider if the habits of that country align with your products? As John Hooker once said “there is no better arena for observing a culture in action than business”. Doing a PESTLE analysis will help you analyse the political, economic, socio-cultural, and technological changes in your business environment.
4. Understand the market: Create buyer personas for your product. To do so – it is best you answer the following questions:
· What do my target market want? Will they be interested in your product?
· Understand the pricing for similar products in the market and study how new products are marketed in the region.
· How do the locals like to shop? Would they be motivated to purchase online or offline? If it is offline, would they prefer exhibitions, open air markets or departmental stores?
Google Trends proves useful to understand shopping behaviour of customers too.
Apart from the above, talk to other local companies that have worked there, ask them who they do business with and who they find to be reputable? Visit Trade organisations in those locations as trade shows, export related summits and trade missions can be helpful in this regard.
5. Analyse the competition: Study the current competitors in the market and analyse their value propositions, derive lessons from their successes and more importantly their failures. What gap did they not fill? How would your company fill that gap successfully? This tool proves functional in determining your market position.
6. Choosing the best business model: Examine if it is completely necessary to fully establish and register a new company, with a local physical office and hiring staff members? This is a big move especially if this is your first entry into a foreign market. There are two alternatives to this: Firstly, get an international number from Blueface that allows your local customers in that market to call your office in Ireland at no extra cost. This allows you to have a virtual office with several numbers directing to one account. Find out how we can help you enhance your international presence. Secondly, find a reliable and reputable local partner who would be willing to market your white labelled products/services and generate growth.
7. Prepare a Performance Index: Create a performance index with a certain export budget and overseas distribution etc.., maintain key dates in your export calendar, sales targets, marketing strategy for the new market, risk management, technology costs and measure the return on investment against it to know where exactly you stand. Product Profitability Analysis tool helps identify top performing products to cut unprofitable product lines.
8. Effective Partner Relationship: There are three forms of governance between new market entrants and their international partners; trust, knowledge sharing, and contract-based relationship. All of these mechanisms contribute in enhancing the new entrant’s competence to exploit local market opportunity. However, among the three, trust seems to be the most effective way to curtail distributor opportunism.
9. Know the Political and Legal Factors: The attitude of the government and the people of the host country towards foreign companies is to be considered seriously. It is best to work with local experts in understanding the laws that would govern your business in the new market. There are different factors to consider, for example taxes and import/custom duties, that need to be understood carefully. Yet again, PESTEL analysis provides a bird’s eye view of the business conduct.
10. Business is a Collaborative activity: Success only comes from effective collaboration which emanates from adopting very clear and transparent business methods right from the beginning. This in turn will help garner good reputation in the new market. According to Nielsen 92% of customers believe recommendations from friends and family over other forms of advertising. Last but not the least, be ready to change your plans to adapt to the ever-changing market needs.
Ireland is currently the world’s most globalised economy. In order to continue growing, it is crucial that while penetrating into a new market, the focus is on execution and operational excellence. Therefore, it is crucial that we develop highly flexible business models that can respond to new opportunities and threats effectively.
Blueface is exhibiting at the EXIM Summit happening in Dublin on Nov 18th 2015 at the Croke Park.