Entering new markets is easier said than done, requiring careful pre-planning and meticulous research. It’s in your company’s best interests to have a clear understanding of the way business is carried out in your newly-chosen market.
Expanding into a new market can be an effective way to leverage your core business for growth. But it takes a disciplined process to accurately assess the potential of each growth opportunity, because a bad bet can bog down your business.
Investing the appropriate level of resources in market analysis, selection, and entry method can create a foundation for success in the chosen market. Here are several key steps, that each company must consider before entering the new market.
Perform Market Analysis- Expanding into new markets involves a great deal of market research in addition to target customers. You’ll want to develop an in-depth understanding of market growth rates, forecasted demand, competitors, and potential barriers to entry. This is particularly important if you are looking to enter a relatively undefined market.
Assess Internal Capabilities – Much of your decision on how to enter a new market (build, buy, or partner) is driven by an internal capabilities assessment. During this stage, you should ask yourself questions like: How much of our core competencies can we leverage? Do we have sales channels/infrastructure/relationships in place? What time-to-market considerations exist
Develop Market Entry Options – Once you’ve selected an attractive market, you’ll want to determine the appropriate level of organic investment vs. expanding through a series of acquisitions (or some combination of the two). If you have complementary infrastructure or sales channels in place, you might want to consider an organic approach to growth. The key steps here are to develop the business plan, case for investment, and implementation work plan, including owners, timelines, tasks, and key milestones to enter.
Success of any market entry strategy is driven partially by factors outside of your control–but investment in these upfront steps should help you to mitigate the risk.