We have made step-by-step instructions relevant regardless of time and circumstances for those who are planning or are already preparing to enter a new market. Particular emphasis was placed on the crisis – a period when complex and demanding process acquires new features, challenges, and often unprecedented opportunities.
Stock up on tea/coffee/patience and perseverance and read our material
In this article you will learn about:
- Stages of entering a new market
- What are the fundamental changes in building a new business during the crisis?
- Entering the new market: Checkpoints (quick overview)
How did you come up with this decision?
Let’s begin with why did you set a goal to enter a new market. This may seem simple but right now, as you’re reading this, make it clear: How did this idea come to you? This is 10% of the way and will help to clarify the next steps.
- Are you driven by curiosity and passion, or has the previous niche completely exhausted itself?
- Maybe the competition in the current market is too high and it doesn’t make sense to spend the efforts?
- Will the combination of the current market and the new one double your success?
- Is this a new project from scratch?
When reading the step-by-step instructions, remember the initial goal, and choose the appropriate option.
Perhaps you have a significant part done based on your experience and the history of an existing business – this will significantly reduce the preparation process.
We will guide how to
- Avoid past mistakes
- Benefit from the new market features
1. Research phase
1.1. Identify the role the product should play in the new market.
For example, to become exotic for the local consumer, thus to stand out from the crowd. A possible option is when the selected market segment is filled with similar products: plenty of choices, but none of the competitors stand out, and your product will be able to take a worthy place. Often the desired goal is to occupy a higher price segment than before.
Various examples – almost anything that comes to your mind but with authentic, local (place of origin) characteristics:
- specialized E-commerce platforms, – Zarely.co. Our client specialized in ballet equipment production, as well as wholesale and retail distribution. They are based in Ukraine, but have significant market share on the US market. Their competitive advantage is the unique style of their brand and focus on casual products, along with specialized ones.
- food/drinks brands, – Lipton Tea and Innovative packaging. Practical, helpful and convenient tea bag – Lipton was the first to think about tea quality from a different angle. A tea bag nowadays is an ordinary thing but Lipton paved their way expanding the tea bag functionality and won on the new markets.
- equipment manufacturers, – Yeezy sneakers: it’s easy to say these sneakers fully owe their fame to Kanye West and that’s 50% of success. The rest goes to highly technological design, comfort and limited drops. Result? People want to buy them and share excited reviews on each new pair bought.
- data analytics services or social media services – i. e. TikTok. It’s a unique social media platform in terms of content production and consumption. TikTok has a 99 level of engagement – you create the content you never did before, edit video and audio, follow trends and have an endless feed to scroll. There’s no complicated content – it went viral due to simplicity. So easy to use that you cannot stop. It has a contradictory image, but in fact, its user base and coverage are skyrocketing.
The globalized world makes it harder to stand out, you are less likely to surprise the potential customers. Therefore, the main focus should be on unique product characteristics that weren’t available before. New emotions, customer experience, new techniques for daily actions– you choose what to present as a brand new feature.
1.2. Competitors analysis.
Explore the following components: current market competitors, new market competitors, what are the fundamental differences/similarities. Guidelines for analysis: business model, product characteristics from creation to promotion and sales, customers, trends, Strengths, Weaknesses, Opportunities, and Threats (SWOT analysis).
We prepared an actual example of what SWOT analysis looks like and you can use the same approach for competitor analysis. The company everyone heard about – Microsoft. You will get the idea quickly with the following key points :
1.3. Choose the target market
Based on the current situation (or opportunities available now): market segment, geographic location, demographics. It is most practical to choose a target market that is slightly ahead of your current position. The main emphasis is on “slightly”: entering a new market is complicated enough to focus on, rather than trying to do everything at once.
Further growth and expansion will be determined later while sustainability and consistency are fundamental for entering the new market.
- The first steps before and while entering a new market must be balanced and calculated. The first task is to occupy the chosen niche and gain a foothold in it, continuing to learn its unspoken rules.
- Sustainable and consistent market entry strategy means complex decision-making and prioritizing on your ideal customer portrait, market entry type, budget, competitive advantage.
Keep reading for more information on each of the topics!
2. Analytics phase
2.1. Buyer Persona and how to use it
A more specific level after the target market – an approximate portrait of the consumer (it also reflects the target audience).
It’s an estimated general idea of who might need your product: age, hobbies, occupation, favourite brands, etc. Buyer persona depends on the data you have, so it may change over time.
Buyer persona portrait makes business processes more specific on every stage. You consciously give up your own vision of what is better in favor of the idea of “walking in clients’ shoes” and offering what they need.
2.2. What market entry type is the best?
Let’s be concise: we prepared real examples for each of the market entry options.Your task then is to choose the most suitable one for further expansion in a new market.
- Diageo uses Direct Exporting for part of its production. Being a large multinational alcohol beverage corporation, its scale allows exporting directly without distributors. Right, direct export means you avoid mediators and deliver service/product directly to the customer.
- Did you hear about Peloton bicycle ads? The company launched an ambiguous commercial, everything was done with the best intentions, but the results did not quite meet the goals. It went viral once released in Dec 2019: tons of jokes, memes, righteous indignation, and reactions to the idea of a weird gift. That’s when Piggybacking worked perfectly: the right moment to get the trophy.
Here’s the second part: Ryan Reynolds owns Aviation Gin brand and he contacted Peloton’s ad actress just within the next few days. The Gift That Doesn’t Give Back – a new ad came out on Ryan Reynolds’s official YouTube channel and went viral, too. Piggybacking in action – Aviation Gin brand gained extreme popularity due to other company’s fame (or failure).
- Yeezy sneakers: Kanye West and Adidas entered the market in Partnership. Yeezy sneakers initially were released with Nike and were sold successfully. However, Kanye was searching for more opportunities that he found later with Adidas partnership. This market entry type is the story when results are growing exponentially with the right partner.
- Large multinational corporations are expanding easier than others and have lots of examples of Buying a Company when entering a new market. Nestle owns more brands than you may think and most of their local products initially were separate companies (snacks, beverage, drinking water, etc.). In fact, Nestle can easily swallow the small companies they need and gain even more influence.
A more realistic scenario is a struggling local company that you can bring back to life: your investment, modernization, and a certain reputation that company has in a target market may guarantee your success.
- Vodafone & Telefónica agreed to share their mobile network in a Joint Venture. Is it similar to the Partnership type of market entry? With a joint venture, businesses remain separate in legal terms. There’s a common goal for a certain period of time but you are not tied forever and codependent.
- Greenfield Investments are just one way to make foreign direct investments (FDI) and are often used to expand into emerging markets. They typically involve a parent firm establishing a subsidiary in the foreign country. Coca-Cola and Starbucks are examples of multinational companies that have made numerous greenfield investments worldwide , . Greenfields also avoid the need for intermediaries and may also receive tax breaks .
- Disney owns the license for Disney characters. If you want to use their design, name or idea, pay a fee and become a licensee gaining all the rights for a certain period according to the agreement set.
Franchising is different due to the rights and obligations of both parties. Pizza Hut is spread all over the world offering company standards and reputation, supply and operations for the local businesses. The brand remains the same but there may be different owners.
- For international business, practicality and flexibility are an added advantage and Turnkey projects are a great solution to complete your goals – that’s how Indra company completed a governmental project. It was a contract under which Indra agreed to fully complete all the project goals and turn the project over to the purchaser when it is ready. Indra provided IT solutions for the new airport: they have the knowledge and everything to complete the project in a more efficient way than the government could do it. By the way, Indra case contains detailed information about every step – a great idea to study and use for your project.
Turnkey projects save effort, delegate responsibilities and tasks and get the project done according to the deadlines, according to the term – “turn the key” when it’s done.
Are there any other market entry opportunities?
There’s another option, often considered as alternative or complementary to one of the previous information. Igor Ansoff Matrix (The Ansoff Matrix, also known as the Product/Market Expansion Grid) was developed in the middle of XX century and remains effective nowadays:
How to use it?
The four quadrants offer market expansion options and identify possible risks according to the desired goals. The role of this scheme is to make sure once again that entering a new market is the optimal scenario for business promotion.
With this matrix, you move from the safest to the most risky strategy:
- Expanding sales of your existing product in your existing market – you know the market and the product and what to expect. If you’re planning to enter a new market, most probably you’ve already passed the Market penetration stage.
- Offer a new product to the existing market – slightly higher risks but the market remains the same for the Product Development stage.
- Now it’s your option: Market Development – offer an existing product to the new market. Market Development sage fits perfectly with everything mentioned in our guide.
- Diversification is as risky and complicated as Elon Musk’s projects: introducing new products to the new markets. For example, Musk’s bet with the Australian government that translated into a real venture and saved the country a lot of money. Initially, Tesla is an electric vehicle manufacturer, not the industrial battery producer.
It’s easier to enter a new market if you have a business partner who shares common goals and has relevant experience, and can take on some of the duties and responsibilities.
Cooperation is optional: if you planned a similar idea before, now is a good time to try. The partnership should be declared as detailed agreements with both parties’ positions. An additional guarantee of the success of the cooperation is a lawyer helping with the formalities and their precise formulation.
The idea of cooperation that the RGray offers is not to go into unexplored spaces yourself and to conclude with the support of a business partner.
Apple and IBM announced strategic partnership in 2014 to use each party’s strengths and achieve results they would not get working separately. Both enterprises are world leaders (as well as competitors) in the market and companies’ management found key targets to develop in cooperation:
- New class of enterprise solutions
- Process optimisation for iOS
- IBM’s technologies for device activation, supply and management.
- Deal with the rest of competition on the market. Apple is doing great but they’re always seeking for more prospects and IBM partnership was a large step.
- An obvious benefit: news about Apple and IBM cooperation made a lot of noise – a truly multidimensional decision.
2.4. Competitive advantage
– factors that positively affect doing business in a particular market compared to other participants.
How to make sure it’s a competitive advantage? Think about the value your company offers to customers: Why do they make a choice in your favor and keep coming back?
Having reached this stage, you probably know what’s your competitive advantage. Any doubts left? Use Competitors Analysis – it’s easier to notice what you have and competitors don’t, and vice versa.
How do other companies do that? Take a look at 5 examples:
- Zara. Fast fashion at a reasonable price with unique supply chain management and operations management.
- Barilla. World’s largest pasta manufacturer owning 17 brands. Product diversification, constant market research and innovations for traditional products.
- Uber. Geniusly simple business model: app-based ride tracking and hiring service. Profitable both for drivers and for riders – a real disruptive technology for the taxi service sphere. Company grew up rapidly and now Uber’s reputation is a competitive advantage, too.
- Wizzair. Famous European low-cost airline. Low prices for standard services. Additionally, Wizzair branding was successfully relaunched in 2015 and offers great user experience.
- Glovo. Spanish delivery service conquering the world. Flexible business model, perfect for emerging markets. Due to this, Glovo overcame UberEats and other big players and started a direct partnership with McDonalds – the first in McDonalds history.
3. Planning phase
3.1. Budget planning.
Figure out your financing needs to entail identifying the sources of income and taking into account all current and future expenses, with an aim to meet an individual’s financial goals. This is pretty clear: making ends meet taking into account current opportunities, profits, expenses (especially unscheduled).
- Begin with a year budget plan and each quarter specifically: you’ll get the overall idea and will track changes throughout the year.
- Key points are income, fixed expenses, flexible expenses, unplanned expenses and savings. Further details are included according to your business needs.
- You may use the existing business plan but we highly recommend to double check if it fits the new market requirements.
- Follow the templates to be precise and to not miss anything: the digital era offers you tonnes of examples and financial tips.
3.2. Build marketing funnel:
an effective way to organize workflows and interact with potential customers, leads, existing customers.
You can find alternatives where the funnel is claimed to be ineffective. We do not agree, because the marketing funnel is a reliable way to organize and improve lead generation processes, customer awareness, and build long-term trusting relationships.
Can everything be as simple as this picture? Yes, there is no need to complicate when a proven approach works. At the same time, there is plenty of room for creativity and innovation. For example, in the first stage (Awareness), you choose to attract potential customers, communication channels, advertising, etc. It is also an opportunity to offer useful materials/tips/ideas that are not directly related to sales.
A bright company example is Tinder. No matter if you used it or not but you definitely heard of it because that’s how their Awareness stage works.
When did you hear about it for the first time? Perhaps a friend told you or someone was spilling the tea over the new romance “Oh, they started dating on Tinder”. You learned about the company even without any certain advertisements!
However, this way you will be remembered, you will take confident steps to create new customers – the funnel offers many options for the development of events based on certain stages.Is it possible to modify the funnel? Yes, these are not strictly defined rules, some situations involve reducing certain sections of the funnel path or adding new ones as needed.
3.3. Company representation.
Сompany image, PR, building a business strategy based on cultural, macro- and microeconomic characteristics, consumption culture in the selected market – each of these areas impacts the perception of you as a new business in the market. Gradually thought-out representation of the company helps to establish itself as a professional among competitors and win the favor of new customers. Also, it contributes to being effective in the Awareness stage of your marketing funnel.
Related: 7 Steps to Build a Quality Brand
Modern market does not tolerate neglecting small things. Thus, the primary task of a competent representation of the company is to not be rejected in the new market.
4. Implementation phase
4.1. Everything about online presence.
You need a convenient website to promote your business online. If you don’t have one – we strongly recommend working on it and fill in with relevant content. A quality website designed specifically for an online business is a great investment and will return quickly.
Having a website, the business will grow many times faster. It’s not about a few percent or several times growth. An online audience is absolutely everyone who can find a company online and learn about your business – it’s a huge scale.
Mobile application development is a more specific case and we’re not going to persuade everyone to develop a mobile application. However, this isn’t the case with the company’s website – an absolute must-have.
4.2. Online business promotion: tools and techniques.
There are several scenarios:
- You are confident about your skills and experience and manage this huge part on your own.
- You do not make online business promotion a top priority and deal first with the formal part of entering a new market, and then return to marketing – least beneficial scenario. At the very first moment, you enter a new market with extremely high chances to succeed and everything depends on the next steps. Online presence is uber important and if you skip it from the beginning – expected results may be worse than you plan.
- For the first period, it is very convenient to trust professionals to build a detailed strategy, reduce the risks, and maximize profit using a wide range of digital marketing tools. Basically, that’s what RGray does and our results are proved effective.
The main areas of work for the promotion of online business:
- website (content, structure, efficiency, optimization),
- social networks,
- email marketing,
- website promotion,
- various types and platforms of advertising,
- work with the audience,
- and much more.
It performs great together: business analytics state that digital marketing budgets tend to increase every year. Meanwhile, online promotion is 40% cheaper than offline marketing and its potential is unlimited.
4.3. Business metrics and KPIs…
…are two different things. You need both to measure different processes and business performance.
Key Performance Indicators (KPI) show if you reach the goals you defined for a certain period of time. You set the scale to estimate if your plans are attainable and if everyone works hard enough to achieve the desired KPI. Motivation is KPIs key component that’s why you don’t set unrealistic expectations for your workers.
Every KPI is a metric, but not every metric is a KPI. Business metrics are objective current indicators and exist regardless of whether or not they fit into your KPI.
Example: gross margin is one of the key business metrics but you do not necessarily include it to every worker’s KPI list. If we’re talking about business KPI, this is significant. However, for the first few months in a new market, you might even have different priorities than gross margin. Another example is the customer satisfaction rate – a standard KPI but not a business metric.
At some point, RGray agency was in the shoes of a market newcomer. From our company’s experience, the uber important KPIs while entering the new market are a number of Customers Acquired, Customer Acquisition Cost, and Coverage (how many people have heard about my company/product).
What are the fundamental changes in building a new business during the crisis?
“It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is most adaptable to change.” —Charles Darwin.
The economic crisis always occurs together with the social crisis and related response in society. Events of this magnitude are reflected at every step, so it is worth taking into account consumers’ preferences, priorities, and purchasing power. A crisis is a period of a sudden change of values, a time when secondary things fade into the background, become redundant, and an unjustified waste of money.
It’s worth mentioning business during the current pandemic crisis. However, this is not the first and not the last crisis for the world economy – its development is cyclical and constantly experiences ups and downs. Catching the right moment is one of the important ideas.
What first comes to mind when you hear about the Economic crisis? Unemployment? Reductions in enterprises? Difficulties in doing business? This is exactly what happens, but you should not forget about the other side for you as an ingenious entrepreneur: it’s a time of unexpected successful decisions and opportunities that rarely happen in normal times. For many reasons, entering a new market can be successfully combined with a period of crisis.
Changes that have positively affected the business and allowed to prove itself from a new angle:
- Rapid digitalization. Online accessibility has always played into the hands of businesses: your prospects can find comprehensive information 24/7, online reviews, huge audience. For the last 4-5 months, everyone has thought about the online platform (if it did not exist before). Owners of existing online businesses were able to get the most out of the current situation and stay in touch with customers within a few clicks.
- It’s easier to wedge into a new market because there are fewer competitors. Right, this is an extremely controversial thesis. Competition is high in any niche and the opportunity to create your own, to be the first in a new direction does not happen to everyone. However, many enterprises shrank, didn’t have time to adapt to the new conditions, and were left far behind. This is your chance to play ahead, knowing about all the mistakes that competitors have made in the past in the new market.
- Supporting business at the legislative level in difficult times is a good start. Your task is to take full advantage of rare opportunities.
What do potential customers expect from you as a business during the crisis?
- Customer orientation. It is important for people to know that you care. No matter how good your product and service are, the attitudes, the values you offer are important and they must intersect with the client’s vision.
- Personalize and build long-term relationships instead of striving for quick profits. You win at a particular moment, but most probably you won’t consolidate your position.
- People remember those who supported them in difficult times. How can this be implemented? There are many options – a promotional video for products without aggressive marketing, email newsletter with special offers for customers, news about how the company interacts with society during the crisis.
- Offer not a product, but a unique experience that comes with the purchase. This can be called the golden rule of modern marketing and it works on everything.
You can’t be too careful about business
From business during the crisis period, we gradually moved to risk management. The task of the latter is to anticipate, prevent and, if necessary, find optimal solutions for the smallest issue that may occur.
This is an extremely practical approach, which indicates your readiness for a serious step – entering a new market. We advise the following ideas:
- Do not underestimate competitors
- Do not overestimate your strength – there must be a balance in everything
- All calculations (competitors analysis, new market, business capabilities, budget, costs, absolutely everything) should consider deviation by several percent. In addition, almost every market has certain variability, and fluctuations become more significant during the crisis.
- The “What if…?” questions should occur at every step. Your success is at stake and this is not an extra precaution.
- Operational transparency. For you, for financial institutions, government, and society as a whole. The rules and regulations may vary, but this will reduce the possibility of manipulating you or pushing to zero – pitfalls are often not visible even to experts in their field.
- Local media. This is a fairly original approach and the task is not advertising but publicity and spreading what you do. Nowadays, business owners’ stories format is very popular: life events, where it all started, what benefits you bring to your customers. Prove yourself and present in a favorable light.
We prepared more information on the following topic for the US specifically – Must-have elements for your Go To Market strategy for the US market. Our guide will be useful for those who set ambitious goals and make efforts to achieve them.
Instead of Conclusion
We are glad you have read so far.
Make sure everything is clear with the Final Checkpoints:
- You defined specific goals to enter a new market.
- Transformed the Research, Analytics, Planning, and Implementation Phases into a comprehensive market entry strategy.
- Made sure that the newly created strategy is logical, clear, consistent and comprehensively thought out.
- You have taken into account the features and potential opportunities for business during the economic crisis.
- Kindly reminder on the proposed RGray materials – 6 Types of Content Marketing That Work Best for Your Business Growth and a Free Brand Development Ebook and Must-have elements for your Go To Market strategy for the US market.
We shared our experience and step-by-step instructions for entering a new market. RGray Team sincerely wishes you good luck and we’re always ready to help – you know where to find us:)
- Securities and Exchange Commission. “Subsidiaries of The Coca-Cola Company, https://www.sec.gov/Archives/edgar/data/21344/000002134418000008/a20171231ex-211.htm .” Accessed July 30, 2020.
- Securities and Exchange Commission. “Subsidiaries of Starbucks Corporation, https://www.sec.gov/Archives/edgar/data/829224/000082922418000052/sbux-09302018xexhibit21.htm.” Accessed July 30, 2020.
- Organisation for Economic Co-operation and Development. “Foreign Direct Investment Restrictions in OECD countries, https://unctad.org/en/Docs/iteipcmisc3_en.pdf,” Pages 1-9. Accessed July 30, 2020.