Once a business seems to be established and performing well in its home market, it is often considered an optimal moment to expand into a newer market. If the organization enjoys good sales, excellent brand awareness, and feels stable financially, it might be the right time to branch.
Given the exemplary performance of the company in question in its home market, there is every possibility the organization understands its market, its required standard of output, and how to meet them efficiently and effectively. However, new ventures offer a different challenge. There are often far reaching risks associated with venturing into newer markets. They cannot be taken lightly. A new market is always not comfortable given that there are new competitors and unexperienced threats. The key to success before emerging into a new market is an organized approach into a market analysis.
The following are some of the tips of what activities to perform before entering a new market.
Understand the market
Organizations should carry out a detailed analysis of the market before investing. The analysis should aim at determining three fundamental issues associated with each market penetration adventure. These issues are:
- How are new products or services that you offer sold within the region? Additionally, how do prices compare?
- What are the market’s tastes and purchasing habits?
- On what markets are the products or services you offer likely to be sold? In open markets, online stores or department stores?
Analyze the costs
Besides the production and distribution costs, it is prudent to estimate the cost of shipping the commodities, insurance costs, government duties, and storage expenses. With these costs accounted for it is easier to determine whether the company can still earn profits at a competitive price.
If the targeted market is notorious of excessively high taxes and other hidden expenses it might be wise to reconsider the plan.
Examine the competition
It is wise for companies to check which organizations are doing well in the market and which ones are not. Always aim at determining what went wrong or right for some of these businesses. In the event there are many competitors in the same market, it might be a good move to form partnerships with one or more of the local companies. More often, this approach has proven to be more secure and profitable.
Choose the best business model
Penetrating into a foreign market into for the first time is an ambitious move. Businesses, to a large extent, depend so much on the type of business model in use. Before entering a new market consider such models as using local offices with local staff members or importing personnel from the native market. However, a better approach may be to find a performing local partner with good brand awareness to help your products and services perform in the market.
Prepare a plan
Before moving into a new market, it might be necessary of you to prepare a well-documented marketing plan. The plan should cover essentials such as a contingency plan, the budget, sales targets, and expected returns on investment. Diligent adherence of this plan should lead to successful entry into the market.
Know the people
Before entering a new market, one ought to understand the potential consumers. What are their tastes and preferences? How much money can the people spend to get your products or services? How often do they shop and what are their preferred market areas?
Understand the law
Attempt as much as possible to understand the laws applied in the new market. It is often best to work with local companies to understand the stipulations governing the industry. This may include staff laws, custom duties, and taxes.
Many companies have entered completely foreign markets and performed. The key to success in a new market, therefore, lies in the correct analysis and understanding of the market. This enforced with a right action plan will guarantee success.
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