The Guide to Breaking into New Markets
A growing business is a prosperous business and expansion is a necessity for a business to succeed. Breaking into new markets is an excellent way to expand but can be challenging. To achieve success when targeting new markets business owners must calculate potential profits and formulate an entry strategy for each market.
In this article, we’ve laid out a process that can be used for gather and process data before heading into new markets. Data collection will aid in determining the probability of success and allow for course correction. For instance, the amount of financial investment needed and available must be determined before an entry strategy is put in motion. There search process must also include:
- Market selection
- Market analysis
- Method of Market Entry
The following steps will allow any business entity to assess the probability of success and choose the most profitable new market.
Specify the Target Market
As with any marketing campaign, the specific target must be determined. Although this may seem like a simple step, there is a great deal involved in this decision. Without detailed research into the market,success is left to chance. The market must be broken down by:
- Target audience
- common interests
- need for or interest in your product/service
- Physical location
Analyzing potential markets, as well as potential consumer targets, will offer vital information on the potential profits available there. This step in the process will include a great deal of research into each market’s:
- Current growth rate
- Forecast-ed demand for your product/service
- Current competitors
- Barriers to market entry
Assess Your Own Business
There are multiple ways to enter a new market. If the plan is a brick and mortar entrance a site must be chosen for building or buying an existing location. This may require a large financial investment. Another possibility is to partner with an existing business in the market. Partnering brings about a separate set of risks but can be a better choice when sharing financial risks. Partnerships will also add the element of negotiation to the process.
The investment of resources, including time,must be assessed for each option. This point in the process is the perfect time to ask important questions.
What are our core competencies?
- advantages over the competition
Which sales channels will be successful in this market?
- direct to consumer
- retail middleman
Do we have any relationships established in this market?
- business partnerships
What is our Time to Market (TTM)?
- the amount of time from product conception, or market entry, to sale. Especially important for products that are quickly outdated, as with technology.
The results of each market analysis should produce enough data to allow for prioritizing. Lay out market choices from best to worst fit. The top of the list should be the market where you’ve found the highest probability of success. The best market will be an area where there is a great need or desire for your product or service. A high priority market will not be saturated with competition. The most probable choice for expansion will offer entry at a reasonable expense of resources.
Understand the web position of this marketplace. Take a look at the top ranking web sites in search engines within the United States and determine if your marketing budget and SEO skill-set will allow you to compete and gain the necessary traffic.
Analyze Options for Market Entry
When you have chosen the greatest opportunity, determine the best way to enter that market. It’s time to develop a specific business plan for the chosen market and work your plan.
- Determine the necessary investment
- Choose an entry vehicle
- Create timeline
- schedule tasks
- define timed goals
- what is your marketing budget
This process to formulate an entry strategy into a new market may seem tedious, but failure is costly. Performing your due diligence before extending yourself is key to success in any venture. Consider the cost and the risk before you make a move. Being spread too thin can endanger the success of the entire business. Following a well laid out plan is the best way to minimize the risks involved in expansion into new markets.