Why do you want to enter a new market?
Is it because of expansion to a new audience? Identification of an inefficient competitor working in a different market? Maybe because you have a product or service that does not match your current audience and you are interested in trying to enter a new market before you give up your business?
Any move whatsoever that leads to penetration into a new market, will need an organized plan in which we will talk about a number of topics.
The concept of market research describes a broad category of research methods that are required in certain situations and for the benefit of diverse business goals. The various research methods can coexist within the same research and are chosen according to the needs and goals of the company
Expanding a business to international markets is a complex process that requires a thorough understanding of the target market.
Entering a foreign market without proper market research can lead to costly mistakes and ultimately failure, so thorough market research plays a crucial role in ensuring the success of a business in the global market.
One of the reasons companies fail to penetrate a new market is because no market research has been done to check the levels of demand and supply for your product.
What is Market Research?
Market research is an essential factor for the success of any business plan.
This is a process of collecting data about the business, competitive and marketing environment in which you operate or wish to operate.
Market research is designed to allow companies to get to know their target markets better, and to assess the potential consumer’s interest in a product or service. The collected data is translated into business insights, on the basis of which strategic and tactical decisions are made regarding the feasibility of an idea and the viability of investing in it.
When will we conduct market research?
When creating a new product or upgrading and adapting existing products to the changing market for additional audiences, for larger audiences
When we want to penetrate a new market, whether it is another market in the country where we operate, or a market in another destination country
Before branding our company and products – to incorporate research into the processes of branding the company and the products it markets
before a broad marketing campaign
Research on bureaucracy – law and taxation, regulation and law
Market research will promote strategic business moves such as entering a new market, product development or launching a marketing campaign. A well-planned and carefully executed study will allow the company to learn from similar test cases, find effective ways of operating, generate future forecasts and identify opportunities. This step is necessary to improve a company’s activities and services, to emphasize its differentiation in a competitive environment and to accurately convey its message to the audience.
What can we learn from market research?
Market research expands the existing knowledge in the hands of companies on several levels. First, regarding the competitive environment in which they operate. In addition, they allow the company to position itself in relation to competing factors, get to know the target audience, improve work practices and more. In terms of the competitive environment, we will check price levels and customary pricing models, estimate the market potential, locate and characterize existing products, etc. As for competitors, we will map the active players in our market, check what their market share is and how they market, and more.
We will characterize the target audiences, check their brand perceptions and their behavior as consumers, what they like, think, need and desire. and other aspects that are relevant to the business activity (such as accepted methods for management, production or operation; costs for raw materials, expected expenses; local customs or business requirements unique to the market and more).
The more we know how to ask the right questions and produce research that will provide us with up-to-date and high-quality information about the conditions and players that characterize the market in which we wish to operate, the greater our ability to perform effective actions and minimize the margin for error. A correct analysis of the market will allow us to differentiate the business among existing competitors and produce better quality products for our target audiences, manage effective marketing campaigns, and identify bureaucratic and other barriers ahead of time.
Correct and effective market research is designed to prevent:
- Waste of time, precious resources and high costs entering an unprepared market
- Lack of demand for our product
- Lawsuits in violation of local rights
The more a company is equipped with up-to-date and high-quality information about the factors that make up the market in which it wishes to operate, the more it will be able to differentiate itself among its competitors and produce quality products for its target audience, and at the same time manage effective marketing campaigns.
The concept of market research describes a broad category of different types of research that are carried out according to different methodologies and serve diverse business purposes. The various research methods can coexist within the same research and are chosen according to the client’s needs and goals:
5 reasons why you should conduct appropriate market research before entering new markets:
1. Market research provides valuable insights into the preferences, behavior and culture of the target market. Understanding the local culture is essential because it can influence consumer behavior and purchasing decisions. For example, a product that sells well in one country may not necessarily sell well in another because of cultural differences. By conducting market research, businesses can tailor their products and services to meet the unique needs and preferences of their target market.
2. Market research helps businesses identify potential competitors and assess the level of competition in the target market. This information is essential because it allows businesses to develop a competitive strategy and differentiate themselves from the competition. It also helps businesses understand the pricing strategies and marketing techniques used by competitors, allowing them to adjust their strategies accordingly.
3. Market research helps businesses understand the legal and regulatory environment of the target market. Each country has its own laws and regulations that regulate business activity, product standards and consumer protection. By conducting market research, businesses can ensure that their products and services comply with local laws and regulations, reducing the risk of legal problems and penalties.
4. Market research helps businesses identify the most effective marketing channels and strategies to reach their target audience. Each market has its own unique set of media channels and communication preferences. For example, social media may be more effective in some countries than traditional advertising methods. By conducting market research, businesses can determine the most effective marketing channels and develop a marketing strategy that will resonate with local audiences.
5. Market research helps businesses assess the overall market potential and profitability of the target market. By analyzing market size, growth potential, and consumer spending habits, businesses can determine potential return on investment and make informed decisions about market entry.
So as we see, market research is an essential component of any international market entry strategy. It provides businesses with valuable insights into the preferences, behavior and culture of their target market, helping them tailor their products and services to meet the market’s unique needs.
A proper market research serves as a basis for us to check the feasibility and understand whether it is worth turning to a new market and which market exactly.
Want to make sure you expand your target audience and succeed in penetrating a new market?
Don’t set out without appropriate market research!
Setting up a Strategic Plan
Building a strategic plan is so important before entering an international market. A strategic plan basically provides a road map where we can enter and succeed in a new market. This allows us to identify its goals, objectives and resources needed to achieve these goals.
Many companies fail to break into a new market or even succeed in the market in which they work because of a lack of management, that is, they do not carry out an in-depth strategic plan while going down to details and operational execution.
After all, how can you really accomplish something if you haven’t planned in advance and defined goals, costs, coordinating expectations of what you want.
The strategic plan serves as a sort of “manager” and is the main outline of our goals, after executing a suitable strategic plan usually comes the phase of building an operational plan.
Here are 5 reasons why it is imperative to build a clear strategic plan before entering a new market.
1.Understanding the market (through market research)
Entering an international market requires a thorough understanding of market dynamics, including consumer behavior, cultural nuances and competition. Developing a strategic plan allows the business to conduct in-depth market research, analyze the data and make informed decisions about how to enter and succeed in the market. This understanding is critical to making informed decisions about what products or services to offer, how to price them and how to market them to the target audience.
2. Allocate resources efficiently
A strategic plan ensures efficient and effective use of business resources. It helps a business identify the resources required to enter and succeed in the international market, including financial resources, human resources, technology and supply chain management. This allows the business to allocate resources in a way that matches its goals, objectives and budget.
3. Development of a Go-To-Market strategy:
Developing a market entry strategy is a key component of a strategic plan. This involves determining the most efficient way to enter the market, whether through partnerships, acquisitions or other methods. A market entry strategy ensures that the business minimizes risks and maximizes opportunities by choosing the most appropriate method of market entry. This strategy also includes identifying potential regulatory barriers and compliance requirements.
4. Identify potential challenges
Entering an international market poses many challenges, such as cultural differences, regulatory compliance, logistics and supply chain management. A strategic plan helps a business anticipate these challenges and develop contingency plans to mitigate them. This preparation ensures that the business is well prepared to overcome any obstacle that may arise.
5. Setting realistic goals and objectives
Setting realistic goals and objectives is essential to the success of any business. A strategic plan helps a business set achievable goals and objectives that align with its overall mission and vision. It also provides a framework for measuring success and tracking progress over time. This allows the business to evaluate its performance, make adjustments as needed and achieve its long-term goals in the international market.
In conclusion, having a strategic plan is essential for any business seeking to penetrate an international market. It provides a road map to success by helping a business understand the market, allocate resources effectively, develop a market entry strategy, identify potential challenges and set realistic goals and objectives. A strategic plan allows a business to navigate the complexity of an international market and establish a strong presence, which increases its chances of being successful in the long term.
Recruits & training of a local team
When a company expands into international markets, it is essential to have local staff who understand the local culture, language and business practices.
Recruiting and training local staff can provide a company with a competitive advantage and increase its chances of success in the global market.
5 reasons why it is important to recruit and train local staff in the new market you are entering:
1. Local teams are better equipped to understand the needs and preferences of the local market. They can provide valuable insights into local culture, language and business practices, which can help companies adapt their products and services to meet the unique needs of the local market. Training local teams ensures they are equipped with the skills and knowledge needed to understand the market, identify opportunities and develop effective strategies.
2. Local teams are more effective in building relationships with local customers, suppliers and partners. They can navigate cultural differences and build trust, which is essential in building successful business relationships. By training local teams, companies can ensure that their employees understand the importance of building relationships and are equipped with the skills required to do so effectively.
3. Local teams can help you navigate local laws and regulations. Each country has its own set of laws and regulations that regulate business activity, employment practices and consumer protection. Training local staff ensures they are aware of local laws and regulations and can help companies navigate them effectively.
4. Local teams can help you adapt to the marketing channels and preferences of the local market. Each market has its own unique set of media channels and communication preferences. Training local teams ensures that they are aware of local media channels and media preferences and can develop effective marketing strategies that will resonate with local audiences.
5. Local teams can provide you with a competitive advantage in the local market. They understand the unique needs, preferences and challenges of the local market and can develop strategies that differentiate the company from the competition. Training local teams ensures they are equipped with the skills and knowledge needed to develop effective strategies that drive business growth and success.
So we understand that recruiting and training local teams is essential when penetrating international markets.
Even if it is a local sales team, operations team, comical customer service or even a proper marketing team.
If you don’t train the local staff and build a suitable DNA for the local market, you won’t take advantage of the great advantage of your employees and the penetration into the new market will not be effective.
But before you start the processes of locating and recruiting local candidates in an international market, there are several important considerations that a company should take into account.
These considerations include:
Employment laws and regulations
Each country has its own set of laws and regulations governing employment practices. It is essential to be aware of local labor-related laws and regulations, such as minimum wage requirements, hours of work, and benefits. Failure to comply with local laws and regulations may cause legal problems and damage the company’s reputation.
Culture plays a significant role in how employees communicate, work and interact with each other. It is important to be aware of the local culture and customs to ensure that the company’s employment practices are in line with local expectations.
Communication is essential in any workplace, and language barriers can hinder communication and productivity. It is important to consider language skills when hiring local workers and provide language training if necessary.
Work permits and visas
Some countries require work permits or work visas for foreign workers to work legally. It is important to understand the local requirements and obtain the necessary permits and visas before hiring foreign workers.
Hiring procedures vary from country to country. It is important to be aware of local practices and customs related to recruitment, such as the use of recruitment agencies and the interview process.
Compensation and benefits
Compensation and benefits packages vary from country to country. It is essential to understand the compensation and benefits practices of the local market and to ensure that the company’s packages are competitive and aligned with local expectations.
Tax and salary
Each country has its own tax and wage requirements, and it is essential to understand these requirements when hiring local workers. It is important to comply with local tax and wage laws to avoid legal problems and damage to the company’s reputation.
In conclusion, employing local workers in an international market requires careful consideration of local laws, culture, language, recruitment practices, compensation and benefits, tax and wages, and work permits and visas.
By taking these considerations into account, a company can ensure that its work practices meet local expectations and comply with local laws and regulations. This can help the company establish a strong presence in the local market and build a successful business.
Finding local suppliers
When a business expands into international markets, it is essential to look for local suppliers and service providers. Partnering with local suppliers can provide a number of benefits, such as reduced costs, faster delivery times and better access to comic expertise.
5 reasons why you should work with local suppliers:
1. Cooperation with local suppliers can help reduce costs.
Local suppliers have a better understanding of the local market and can offer products and services at a lower cost. This is because they do not have to bear additional expenses such as shipping, import duties and taxes. By partnering with local suppliers, businesses can reduce their costs and increase their profit margins.
2. Collaborating with local suppliers can help businesses gain access to local expertise.
Local suppliers understand the local market and can provide businesses with valuable insights into local trends, consumer preferences and regulatory requirements. They can also help businesses navigate the local business environment, including local laws and regulations.
3. Cooperation with local suppliers can help businesses reduce delivery times.
Local suppliers are located closer to the market and can provide faster delivery times. It can help businesses meet the demand of the local market and gain a competitive advantage.
4. Collaborating with local suppliers can help businesses build strong relationships with local customers.
This can help businesses establish a strong presence in the local market and build trust with local partners. It can also help businesses develop a strong supply chain, which is essential in meeting local market demand.
5. Cooperation with local suppliers can help businesses reduce risks.
Local suppliers have a better understanding of the risks of the local market and can help businesses navigate them effectively. This can help businesses avoid potential problems such as regulatory compliance, product quality and logistics.
Locating reliable local suppliers is not an easy challenge, but as soon as we move with him and start working together over a long period of time – you will see for yourself the huge advantage they have in working with local customers which greatly helps with reliability and long-term growth in the new country in which you are working.
Setting-up an International Entity
Before entering an international market, the question arises:
“Do we have to open an international company or can we work with the local company in our country of origin?”
Whether it is necessary to open an international entity or not depends on the specific circumstances of the business and its goals for entering the international market.
If you intend to hire local workers, if you intend to work with local suppliers, is their business managed remotely and do you provide the service online only?
In many cases, it is advisable to establish an international entity as it can offer several advantages.
The advantages of establishing an international entity include:
Establishing an international entity provides legal protection to the business in the foreign market. This helps protect the intellectual property, assets and brand of the business, and reduces the risk of infringement and unauthorized use by competitors.
Establishing an international entity can provide tax benefits, such as reduced tax rates, tax incentives and lower compliance costs. It allows the business to take advantage of the favorable tax laws in the foreign market and reduce its overall tax burden.
Access to finance
Establishing an international entity can facilitate access to financing in the foreign market. This allows the business to establish relationships with lenders, investors and local financial institutions, while providing access to new sources of capital.
Knowledge of the local market
Establishing an international entity provides the business with knowledge and expertise in the local market. This allows the business to hire local workers, establish relationships with local suppliers and distributors, and gain a deeper understanding of the local culture and business environment.
Many customers would perhaps prefer to feel more comfortable if they knew they had a “mom and dad”, meaning that the international company has a local branch with a local company that they can turn to in some cases. Sometimes opening a local company indicates greater faith than an international company that only operates in another country.
Flexibility and scalability
Establishing an international entity provides the business with flexibility and scalability in the foreign market. It allows the business to quickly adapt to the changing market conditions, expand its activities and take advantage of new opportunities.
Sales and payment methods
Establishing a local entity in the international market can help with sales and work with more convenient means of payment adapted to the local market. For example, if a customer would prefer to pay with an electronic wallet or a credit card issued only in his country, then working with this local SMC will sometimes require opening a local company and entity, in terms of regulation and monitoring of the company’s activities.
So while it is not always necessary to open an international entity, doing so can provide many benefits to businesses entering the international market. These advantages can help businesses establish a strong presence in the foreign market, reduce risks and increase their chances of success.
Another thing that is important to clarify is that not everyone can open a local company in an international market, which means that you must consult with authorized parties in order to understand the requirements that exist in each country.
Today, more than ever, we want to receive things here and now.
Our patience is diminishing. Therefore, it is extremely important to make sure that the clearing system matches our target audience.
Choosing the right local/international clearing system can increase our sales volume and ensure that potential customers actually pay with their preferred payment methods.
There are so many payment methods such as: local/international credit cards, prepaid cards, bank transfers, electronic wallets, checks and a wide variety of other options.
Make sure that your customer has the most convenient way to pay for your services/products.
You don’t want to get to a situation where their customer is currently interested in paying, but because your payment methods are not ready to receive their money – the customer will simply cool off and buy from another business.
When choosing the right clearing company, it is very important to first understand the structure of your company so that it fits the banking system and the target audience.
For example, you have a company in Europe, a bank account in Europe from which you can receive funds, but your target audience is in Australia.
That is, you want to receive funds from the target audience that is in Australia. In order to do this in the most cost-effective way in terms of fees and in the most appropriate way considering local payment methods that only exist in Australia, you will have to check whether it is necessary to establish a company in Australia and work with a local payment provider who will be able to transfer local payments in that country of the target audience and then send you the payment to Europe if you wish Transfer funds to other companies you own.
Registering a correct company structure is extremely significant in choosing a suitable clearing company. We can advise you in which clearing system you should work in order not to end up in a situation where customers are unable to pay you or the fees you pay are too high.
What are the payment methods that you must introduce on your website and which payment methods are not at all relevant to your customers.