Which overseas market should a business enter first?
A management team considering overseas expansion needs to know how its product would reach a paying customer in each market. A large market can justify investigation. Before committing capital, management needs to establish who would choose its product, through which channel and on what terms.
Use market size to narrow the list
Agree which decisions are open before commissioning research. If management can fund entry into one market, compare the part of each market the business could serve with its current offer. Look at the customer segment, the alternatives already available and how those suppliers reach buyers. Two estimates labelled “market size” may cover quite different products or customer groups.
Potential demand is one consideration. The fit with the business and the practical cost of entry also matter. A market that requires a new distribution partner or local service capability calls for a different investment from one the company can serve through an existing channel. State that distinction when deciding which markets warrant fieldwork.
Ask the people who influence the purchase
An Australian furniture and homewares designer asked Zenith to help prioritise markets for expansion. The team screened international markets for potential, fit with the business and ease of doing business. It then surveyed around 150 interior designers across three international cities about purchasing criteria, preferred suppliers and their response to the brand’s designs. Interviews with company executives, suppliers and local industry experts informed the entry recommendation. Read the published market entry example.
The distinction between liking a design and choosing a supplier matters here. A designer may welcome a new range yet continue to specify a familiar supplier. Ask about a recent purchase. Which alternatives did the designer consider, who had final approval and what influenced the choice? Suppliers and local industry experts can help establish whether the business could meet those requirements.
Decide what the evidence supports
For each shortlisted market, set out the customer group, the route to market, the investment required and the uncertainty most likely to change the decision. If interest in the offer is encouraging but channel access is unclear, a conversation with prospective distributors may settle more than another broad survey. The board can then decide whether to fund entry, test one outstanding assumption or take the market off the shortlist.
Zenith’s Four-Week Strategic Review shows how market evidence and a financial assessment inform an investment recommendation.
Plan research for an overseas expansion
A principal can help scope the customer, competitor and distribution research for the markets you are comparing.