By Antonio Acunzo
Collecting market intelligence when you expand internationally is a strategic imperative. Understanding the where, why, when and how of stepping into a foreign market will help you optimize company resources, align functions, and design the most effective market-focused strategy to meet business goals.
Your As-Is Business Model May Not Fit Foreign Markets
Quite often companies prefer to sail across uncharted waters confident that their successful business model in their domestic home market may be replicated as-is, and their product or service may be exported without fine-tuning product offering to the demand and preferences of local consumers in target market.
Take the example of China. It is one country, but is not a single market. The tiered city system that classifies cities based on a variety of metrics. Consumers in these markets have different preferences, access to marketing communication, and even languages.
Moving to other countries in the region, you will need to understand differences that range from hyper-developed Singapore and a trillion-dollar GDP country like Indonesia, to fast-growing markets like Malaysia and Thailand, and budding economies like Vietnam, Myanmar and Cambodia.
Pre-Start Market Intelligence Framework
While it sounds simple and logical, indeed this is where most companies and brands fail—unnecessarily. Here is my recommended pre-start market intelligence framework:
Start by selecting a target market, such as a single country, a region of several countries, or a specific target within a larger single market (such as tiered cities in China).
Next assess how easy it is to do business in target market. How developed is the economy? What local regulations apply? How does the local legal system, practices, and procedures impact incorporating a local company, IP protections, negotiations, potential frauds and scams, business practices, and transparency in doing business. Consider also trade agreements, trade barriers or tariffs, tax incentives for foreign entities, the quality of infrastructures (airports, logistics, roads, transportation), how easy it is to travel to and within the market, and language barriers.
Last, study the market environment. Key considerations include:
• Competitors, how they are positioned and how they go to market and communicate their product proposition
• Customer behavior and influences on the purchasing decision process, including language, ethnicity, race, religion, diet, spending power and lifestyle
• Potential local partners—conduct due diligence research to find a reliable partner you can trust and who knows the market
Winning the Competitive Advantage
At the conclusion of your pre-start analysis, you will better understand your company’s capabilities and your product’s competitive advantage. You can then adapt or innovate your offer to appeal to customer preferences. You will also be able to source capital, time and team for the market-entry plan aligned with business goals. An investment in market intelligence at the beginning is your key to success in foreign markets.