|3 Min. Read||Chris Hutchins||March 06, 2019|
B2C brands must consider two key factors as they select international markets to engage: attractiveness and accessibility.
Attractiveness can be summed up as the potential to generate revenue in a global market, while accessibility refers to the level of difficulty a company might experience entering that market. Evaluating these factors requires asking several key questions, and gathering and examining data that will inform those answers.
Keep reading to learn how to identify which markets are the most attractive for your company, and which provide the most accessible opportunities for your brand’s global growth.
The attractiveness of a market is determined by how likely your brand will succeed in-market in the long term, and how valuable the market can be to your overall business goals.
To determine the attractiveness of a market, you’ll need to know:
Your teams may have already conducted research on this, but other resources include doing a top-down analysis that examines those global markets and evaluates their size and makeup. You can also look at a bottom-up analysis by using data from early selling efforts in the market, and extrapolating for what a larger sales potential might look like.
Evaluate competitor data and market share. Also analyze your company’s average conversion rate for purchases in that market, as compared to the overall market size. This estimate can help determine whether there’s enough opportunity to make the new market lucrative for your business.
Customers in global markets have different demands from the goods and services they’ll purchase, and what they’re willing to pay for them. Look at what competitors already sell to determine if the market will be welcoming to both your offerings and your pricing.
Determine if there is already some level of brand recognition or access to your products or services in the market. Entering a market in which customers know about your brand can be more attractive than starting from scratch.
Other than your website, learn what channels you should use to engage potential customers. The influence of traditional channels like TV and radio, as well as digital channels like email and social media, vary from market to market. Be prepared to customize your omnichannel strategy.
The accessibility of a market is about how logistically complex and potentially expensive (or not) a market will be to serve. Some key questions to ask:
Whether it’s regulatory concerns, legal compliance or fulfillment logistics, every market has its hurdles. Carefully study the local laws and business practices to understand what your challenges will be, and whether they’re compatible with your business strategy.
When you’re establishing a presence in a global market, you’ll want to determine your capability to conduct business in the local language. There may also be cultural barriers to consider, or nuances that make some international markets more complex than others.
Ongoing investments and long wait-times for business-related approvals may be required in some markets, which can affect speed-to-market and revenue. Some markets require a local, in-market partner before you can even do business.
Carefully evaluate the investments you’ll need to make to establish operations in a new market, and any ramp-up time required to accommodate licensing, laws or partnership requirements.
In addition, carefully assess the tax and financial structure required to adhere to local policy and procedures. This may involve establishing relationships with tax, payroll and banking providers in the area to leverage their expertise.
Most companies can’t establish operations in a new market without significant overhead. This can include new warehouses, new technologies, and in-market teams to serve customers—from sales to marketing to customer service. Local partners may be helpful for navigating distribution needs, third-party providers and vendors.
Once you understand these core determining factors that predict future success in a new global market, you can start planning your global expansion at a deeper level. In the second part of this two-part series, we will explore more in-depth ways to comprehensively evaluate potential new markets.