International expansion offers huge opportunities for almost any business and when successful, companies typically report increased revenues and profits across all markets, as business effectiveness and competitiveness generally increase.
Expansion into a new market is, however, a risk, with McKinsey reporting that 4 out of every 5 companies fail – a rate even higher amongst SME’s and young companies.
So, what can be done to realise the opportunities and reduce the risks of internationalisation?
Good market planning prior to market entry is proven to be the most important factor to increase the chances of successful internationalisation.
This is the process that enables a company to identify the right strategy to match their ambition, against an identified (and relevant) opportunity, and allocate the right level of available resources (time, money and people) to achieve the objective.
It is a process that can take time – but diligence here, prior to market entry, typically increases success and reduces overall investment prior to earning incomes.
Market Planning: What does this require?
Thorough market research and market validation discussions with in-market experts, suppliers, the trade, distributors and potential customers will help you evaluate the opportunity for your product or service and provide insights and guidance on what you need to do to compete effectively here.
Critically, this will provide the input required to help determine your market strategy and create your market plan.
Key elements of the strategy and plan will identify the best business model for the new market as well as what you may need to adapt or ‘localise’ to be relevant and competitive to realise sales in the new market.
Your home market business model may not suit conditions of the new market and an adapted or localised version may be required.
Additionally, you will need to consider the relevancy of your brand, product or service and adapt to suit customer needs, including:
- the market positioning
- target audience(s)
- key messages
- design of logo, packaging, collateral, overall brand design and
- where you sell
- how you sell
- the type of supporting marketing activities and sales materials required
When to start planning?
Planning and preparation work ideally should commence prior to market entry. This will help keep your new market investment costs low prior to earning revenues.
It will also enable you to focus on sales as soon as you are ready to enter the new market; and when you do start selling, to know to whom you are selling, at what price, what customer needs you are fulfilling, who your key competitors are, and you can be sure that your brand presentation is relevant and credible.
Preparation typically includes the visa application process for anyone relocating from HQ; company registration; identifying potential partners, distributors, suppliers, channels and customers; operational, legal, regulation and HR requirements; property/office identification; plus, any required adaption of the product or service and marketing mix; developing the marketing and sales messaging and materials; communications plans.
Here, the support of in-market experts who can assist remotely is invaluable. They will be able to advise and assist you on the ground, providing the necessary knowledge, introductions, insights and on-the-ground support required helping fast track your preparation and time into market and to sales.
Understanding the situation, conditions and needs of a new geographical market, and planning and preparing in advance for your market entry, typically helps maximise your chances of success.
The market entry plan enables you to understand your opportunity, match and focus your resources, and clearly set out the steps required to realise sales and incomes.
Local, in-market experts are well placed to help you with this planning and preparation. Their local knowledge, insights and connections can provide invaluable support to help realise your new market ambitions.
See also ‘Planning your Market Entry’.
For further information on how we can help with the planning and preparation of your international expansion efforts, please contact Nick Jordan: email@example.com
Author: Gillian Kerr, CMO, Trade Horizons