Market Entry Remains a Challenge to Global Growth
Navigating the complexities of global market entry represents a significant challenge for business leaders striving to expand their companies' reach and accelerate new growth. The intricacies of international markets, from cultural nuances to regulatory frameworks, often present formidable hurdles. Moreover, the demands of aligning resources and adapting products, services, messaging, and communications can feel overwhelming.
A recent global survey conducted by Censuswide for Phrase, involving 2,000 business leaders, found that an overwhelming majority (90 percent) of businesses are planning to expand into new markets that operate in different languages in the coming five years. That's reflective of just how important new market entry is when it comes to maintaining organizational growth. However, at the same time, nearly two-thirds (62 percent) of global leaders report that identifying and entering new markets represents one of their core organizational challenges.
To ensure successful entry into a new market, businesses need a market expansion strategy — one that identifies opportunities within a new market while helping to minimize the costs of entry and avoid potential obstacles. Let's look at the key questions to ask on the path to building a successful plan.
What are your goals and objectives?
The initial phase in formulating a market expansion strategy should involve outlining your overarching goals and objectives for venturing into new markets. These objectives might include accelerating the company's growth trajectory, preempting competitors' market dominance, or optimizing financials by establishing a presence in more cost-effective markets.
Likewise, after delineating your goals, it's also important to delineate specific objectives for each. For instance, what proportion of market share do you aim to secure? What monthly revenue target must be attained? It's important to get granular with these objectives to facilitate progress monitoring and enable agile adjustments throughout the expansion journey.
Is your team on the same page?
Market expansion requires a significant amount of collaboration across an organization. As such, it's important that the person who is leading the expansion effort is equipped to operate in a cross-functional capacity. This person should possess robust connections with leaders across various departments and exhibit a comprehensive understanding of your business landscape.
Securing support from the entire executive team — the individuals tasked with championing the concept across the organization — is imperative for achieving success. Proactively addressing uncertainties and reservations at the outset ensures alignment among all stakeholders toward a unified vision for the market expansion initiative.
What does the market research say?
Once an organization is aligned internally on market expansion, it's time to look outward by conducting research to understand and test the new market. This research should explore segmentation strategies for the new market, ways to position the company for optimum success, how much customers in the new market are willing to pay for given products and services, cultural differences that could influence consumer behavior, and test the messaging most likely to resonate in the new market. In this regard, the market research process is the first phase in ensuring your company is prepared to truly localize the customer experience in the new market.
What's your financial plan?
After conducting your market research, it's time to create a detailed financial plan. That starts with cost analysis and budgeting. Expenses to consider during a market expansion include staffing, market research, product development, marketing and advertising, sales and distribution, customer support, overhead, and more. Once expenses are understood, your team will also need to create a sales forecast based on what is known about the market. Together, the expense estimates and sales forecast can help your organization build an initial budget for the market expansion.
What are your competitors doing?
Around the same time you're conducting market research and preparing the financial details of an expansion, it's important to consider what your competitors are doing in the market. Take a close look at which segments they're targeting, what messages they're using in that market, and what kind of feedback their customers are giving them. This can help you identify opportunities to meet unserved needs or outperform competitors in certain areas.
Are you prepared to localize your brand experience?
While market entry is a complex, multi-faceted process, certain aspects weigh more heavily on organization leaders than others. According to Phrase's recent survey, more than half (57 percent) of business leaders confirmed language barriers are an especially large challenge to business expansion efforts. A proper localization strategy accounts for not only language differences, but also cultural nuances unique to the new market.
What does success look like?
After creating a market expansion strategy, it's vital to measure its success. This involves tracking specific KPIs, measuring customer satisfaction, and evaluating financial results. KPIs should be tied to the strategy's objectives. For example, measuring revenue from a new market or the number of sales representatives hired. Additionally, customer satisfaction can be assessed through surveys or interviews. Regularly tracking and reporting progress helps evaluate the strategy's effectiveness and make necessary adjustments.
It's important to integrate localization from the very start of an organization's market entry process. That's because, in addition to the language and cultural aspects of your products and services, localization also includes how products are designed, how customer support is delivered, and how your advertising and content is tailored. By planning for localization from the outset, organizations can be prepared to overcome many of the challenges that hinder companies on their paths to entering new markets.
The views and opinions expressed are solely those of the contributor and do not necessarily reflect the official position of the ANA or imply endorsement from the ANA.
Pamela Ghosal is director of brand and communications at Phrase.