Deciding to expand your business globally can pose complex challenges. However, careful navigation can yield exponential growth. To maximize success, it’s essential to first identify key markets for your business. Market expansion depends on considering the growth potential of each region and selecting markets already primed for your particular industry. Expansion always poses a risk, but it’s about selecting markets that mitigate these risks and instead maximize opportunities.
How can your brand successfully identify which markets are ideal to grow your business? Consider these prime factors detailed below and learn what to look for when choosing new markets that are best suited for the global success of your company.
Mitigate Risk While Maximizing Growth
Expanding a business into international markets does pose some risk so make sure to include a plan for risk management. It’s impossible to entirely eliminate all potential risks, but with careful management, you can overcome these risks and instead foster new opportunities.
Below are tools designed to help your business evaluate important factors when considering new markets for expansion. Before delving into the comprehensive list below, take care to consider these additional factors when transitioning into international markets:
- Cultural sensitivity: Avoid messages or logos that could be offensive in a new culture.
- Localization: Customer support and websites should be optimized for local languages. Payment should be set up for local currency.
- Pricing strategy: Pricing for products and services should be adjusted to reflect consumer purchasing power and the conditions of the local market.
Keeping the above guidelines in mind, successfully navigate global expansion and maximize such opportunities as better profit margins, expansive talent pools, less competition, new ideas and more opportunities to innovate.
Analyze Market Size and Growth
Optimal growth minimizes risk and maximizes opportunities for market expansion. This largely comes from analyzing market research to identify markets that have a strong customer base and a growing market for your particular service or product. Market research tools, industry reports and marketing agencies specializing in data analysis can help you pinpoint key markets for expansion. Use market research to gather and analyze data about customers, industry trends and competition. This data can then be used to understand customer needs so your company can develop marketing strategies that provide effective solutions.
Examine Economic Stability
Economic stability benefits growing businesses, especially when entering new markets. A growing middle class and strong consumer spending are both indicators of a stable economic environment. However, political stability or instability can also greatly impact the economy.
When assessing economic stability, consider the country’s gross domestic product (GDP). The GDP measures how quickly an economy is growing by comparing its economic output to the previous year. If the GDP is rising, then it’s indicative of an economy that is growing and will have ample resources, such as goods and services, along with increasing wages and profits.
Consider Cultural Compatibility
Cultures do not need to be identical for a business to succeed in a new market; however, compatibility is essential. For instance, a fast-food chain specializing in beef menu items may struggle in regions where religious practices discourage the consumption of beef, such as India. This does not mean a fast-food chain selling burgers cannot succeed in India, but the chain will either have to adapt to fit cultural expectations or choose a different market where beef is more accepted. In this example, the restaurant can adapt to cultural norms by including alternative menu items such as vegetarian or chicken options.
Since each region can be uniquely different, it’s important to consider how different cultures may view your product or services. Some markets will be more receptive to your product as-is, while your product may require modifications to cater to customers in other markets. Consider the consumer preferences and societal conventions of your new target market.
Survey the Competitive Landscape
Are there already direct competitors successfully holding the market in the region you are considering? If so, choosing a different region without direct competition may be a better strategy. Alternatively, analyzing the competition may reveal market gaps that your company can successfully fill. Analyze the market share so you can measure the level of competition.
Evaluating market share can also reveal the competition’s strengths and weaknesses. Learn what works well in the market and what can be improved so you can strategically position your product for better reception. Utilize best practices and provide solutions for market gaps.
Assess Infrastructural and Logistical Capabilities
Infrastructure and logistics factor greatly into successful market expansion. Operating in countries or regions already equipped with the infrastructure to handle exporting goods or can easily provide transportation may significantly reduce additional outside resources. This saves you money and minimizes risk. Can potential markets supply goods and services without disrupting an efficient supply chain?
When considering infrastructure, look at whether the market has the necessary infrastructure to support your business operations without significantly raising costs. Evaluate the following logistics:
- Cost of shipping products internationally.
- Availability of timely and cost-effective transportation for distribution.
- Cost and availability of raw materials for inventory. Diversifying suppliers can mitigate risk.
- Ease of customs and regulations compliance: consider import and export regulations, tax laws and duties.
- Fast and reliable internet connectivity, data centers and cloud services.
- Qualified local talent and employees.
Use the above factors to identify key markets and evaluate risk levels of particular areas. Set your brand up for success by choosing regions with minimal risk and maximum opportunities for growth. Once you choose your new market, take care to remain culturally sensitive while customizing products or services to local consumer preferences.
When you are ready to expand globally, contact the global marketing experts at InnoVision Global Marketing. We understand the nuances of market expansion and have the resources and expertise to develop customized strategies to meet your goals. Contact us today. We are ready to help you identify key markets so your brand can succeed on a global scale.
