When it comes to growing their company, brand managers and marketing managers who are in charge of market expansion planning frequently try to break into new markets and build new markets.

Although it’s an interesting field, corporate expansion can be dangerous for a company. Opening up a new market can boost your company’s reach, visibility, and revenue with the correct approach and market development plan. However, it also carries with it unknown obstacles and new rivals.

Defined market entry strategy

A market entry strategy is a plan designed to increase a product or service’s exposure and reach within a new market. Research on market entry assists brands in entering new domestic or foreign markets where the political, legal, cultural, and competitive environments may not be as well-known. 

A new market’s insight can be attained through market expansion planning research. It aids in the identification of various success elements for brands as well as the disclosure of potential obstacles and untapped opportunities.

Things to think about before market expansion planning

While breaking into a new market might be a wise business decision, there are drawbacks as well. You will need to create a “market entry strategy” and adjust some parts of your business plan in order to take full advantage of this opportunity. Prior to entering a new market, it is vital to comprehend both the chances and the challenges.

Think about the following: 

• The ways in which your new target clients behave and use communication channels
• Cultural variations in specific markets and geographical areas
• Languages and money
• Typical ways to pay
• Local laws

Investigate the demographics and learn about the subtleties. From the standpoint of payments, evaluate how you must modify your payment process for this new market or markets, taking into account their particular needs.

Do a lot of research to ensure that your new market audience is appealing, that their wants are met, and that your business objectives are met. To assist you, we’ve listed the main obstacles you’ll encounter when joining a new market and provided professional guidance on how to get beyond them.

Why move to a new market?

First of all, why should you even think about relocating to a different market? So what are the benefits that outweigh the difficulties and cost? These are a few of the important ones:

• You’ll generate more money and get more clients – Growing your company and boosting revenue through the sale of more goods to more clients is the main motivation for thinking about entering new markets.
• There might be no more room for expansion in your current market– If the revenue potential of your current market has reached its limit, you might have to look for new markets in order to continue growing.
• Increasing the diversity of your firm will lower risk– You will have alternative markets to sustain yourself if one falters for any reason.

Comparing domestic and international markets

Do you intend to bring your goods abroad to be sold in another nation or do you intend to join a new domestic market? Each of these will require a totally different strategy.

Domestic markets

This will usually be a lot simpler than breaking into a foreign market. Everything will likely be fairly similar to your current markets, the culture will be the same, and everything will be closer geographically.

Foreign communities

Global expansion is the point at which complexity increases. You will need to account for a number of variations in the way your organization is now operated. These consist of:

• Cultural distinctions
• Administrative variations
• Financial disparities
• The logistical obstacles associated with shipping products overseas

Things to think about

It’s important to spend some time to make sure you can afford the move before entering any new markets. Can you afford the taxes, fees associated with working with middlemen, exporting, and all other associated costs? And what percentage of the market is it realistically possible for you to service? 

The viability of the good or service in your target market must also be taken into account. In order to ensure that the demand for your goods outweighs the cost of export, market research—both online and offline—is crucial in this situation.

Risks of new market entry

Entering a new market carries a number of additional hazards, such as:

• Country risks include the potential for political turmoil, abrupt changes, or financial problems that could have an effect on your company.
• Your bottom line could be significantly impacted by foreign exchange, including the potential for fluctuations in currency exchange rates.
• Cultural risk, to put it simply, is the chance that your new company will encounter difficulties because of notable cultural and customary differences.
• Weather fluctuations. Are you entering a market where weather and natural disasters could harm your facilities and result in expenses?

You may determine it’s worthwhile to enter your new market after thoroughly examining the possible hazards. If so, you can use a variety of tactics, each having advantages and disadvantages.

Different market entry strategies

Exporting directly

The process of shipping your goods straight to a new market is known as direct exporting. Every part of the procedure, including payments, transportation, and operations in the new market, must be managed independently by you.

When using this strategy instead of working through an intermediate, additional time and resources are needed. Among many other difficult duties, you’ll need to train staff, build an exporting infrastructure, and send and receive overseas payments.

The advantage of this strategy is that it maximizes your profits because you don’t have to pay any outside parties. Additionally, you’ll be in total control of your marketing and sales procedures.

Indirect exporting

Exporting indirectly necessitates using a middleman. It offers a few benefits, including:

• Much reduced risk. The exportation procedure will be handled by a knowledgeable third party, reducing the possibility of failure.
• Without being distracted by your new markets, you may concentrate on your own company and home markets.
• You’ll need to use fewer resources.

On the other hand

• Because you have to pay your intermediary, your profits are smaller.
• You’ll lose out on valuable insights and lessons since you’ll be cut off from your client base.
• You won’t have any more influence over international marketing and sales.

When it comes to indirect exporting, there are numerous choices. These are a handful of the more typical ones.

Exporting indirectly through purchasing agents

Purchasing agents are middlemen for overseas businesses interested in purchasing your goods. When marketing your goods to your new market, you’ll overcome them.

They will attempt to bargain for the best deal because they are often compensated on a commission basis. Occasionally, purchasing agents work for the government.

Using distributors for indirect exportation

You can sell your goods straight to wholesalers or distributors, who will subsequently deliver them to shops.

Using export management companies (EMCs) for indirect exporting: 

EMCs handle all aspects of your export and sales operations in your new market. Finding the right EMC requires some investigation because most focus on a specific market or area. They’ll assist you with finding markets, locating clients, managing logistics and shipping, and much more.

Piggybacking as an indirect export method

Allowing a non-competing entity to market your goods is known as piggybacking. If the partner company already has a clientele and a distribution network in your intended market, this could work incredibly well. For a price, you will have instant access to your new market.

Producing products in the target market

Manufacturing your products in the target market is an additional choice. By doing this, you avoid the high expense of shipping and the numerous logistical difficulties associated with exporting your goods overseas.

But, you’ll also need to take into account the many difficulties associated with manufacturing your goods overseas, as well as any associated prices, hazards, and legal concerns. Depending on your circumstances, this might be a wise choice.

Licensing and franchising

Although quick-serve or fast-food restaurants are frequently linked with franchising, franchising can effectively facilitate expansion across a wide range of industries. In order to use a company’s trademark and market its goods or services, a semi-independent business owner (the franchisee) must pay fees and royalties to the franchisor.A licensing arrangement is usually more restricted than a franchising deal, even though both include sharing some parts of the business in return for a fee.

It is possible for your company to expand and advance by venturing into a new market, which can yield great rewards. It’s crucial to do your homework and make sure the export plan you choose is the safest and most beneficial for you. In order to position your product for success and fully grasp the industry’s potential, you’ll also need to conduct extensive market research.

Turnkey projects

We must be clear about this straight away: not every business idea will work with this market expansion planning strategy. This approach is only appropriate for businesses offering environmental consulting, engineering, architectural, and construction services. This method’s main feature is that everything is created from the ground up and only then given to the client when it’s ready to go.

Turnkey work appeals to us because, well, all it takes is turning a key to get your business up and running. We won’t hesitate to assert that this tactic isn’t any worse than others. Governments are typically the source of turnkey projects. These contracts are among the greatest, thus in order to obtain one, you must compete with other domestic and international businesses.

Joint Venture

Let’s use basic math to describe this market expansion planning technique. When two independent businesses combine to form a third independent business, this is known as a joint venture. In short, this is a 1+1=3 procedure. The fact that the companies collaborate on a single, overarching initiative independently sets it apart from other mergers.

Because you split all of the investments, losses, and profits in half, this strategy is quite convenient.

Wholly owned subsidiary (WOS)

A WOS is comparable to the FDI strategy that we briefly discussed with you before. A company that has another corporate-parent business holding all of its stock is known as a wholly-owned subsidiary. The subsidiary runs separately from its parent business and has its own internal culture, organizational structure, and line of goods to sell. However, the parent business maintains a great deal of control over the subsidiary.

Four strategies for successfully growing your company into new markets

1. Establish your goals

Only when you know what you want is it possible to succeed. Be specific about your reasons for entering the market and why this approach is preferable to others, such as developing new products or expanding into already established markets. Reviewing your brand communication plan is something else you should do. Your remaining planning will have a clear focus if you can articulate the why and what success looks like.

These objectives must be realistic, quantifiable company goals that serve both the short- and long-term needs.

• In what time frame do you plan to launch your brand?
• How long will it take to scale?
• What is the desired market share and from what source will it originate?
• What intrinsic value would the company’s growth provide to the brand?
• What benefits beyond financial gain would the brand expansion offer?

In many firms, the long-term perspective of brand development, brand value, and equity will inevitably be subordinated to the short-term nature of revenue and target achievement. To develop long-term brand health over the course of five to ten years, a marketer must, however, develop a plan, set goals, and provide the funding necessary to see those goals through to completion.

To help achieve the short- and long-term business goals, you need also make sure the board, executive team, and marketing team are all on the same page.

2. Research the New Market

Research is arguably the most important phase in entering a new market because it will support the brand expansion’s operational execution and strategic development.

To effectively enter a new market, you must comprehend it better than any of your rivals, as well as how your current offering and brand values relate to your new market.

It is important to identify and comprehend the pain point your product or service is addressing in relation to the new market before investing in research and intelligence for new market development. It is crucial to dispel any presumptions you may have regarding the product’s direct and simple transferability into a new setting.

Differences in culture and society might affect how people view your brand and product. Determine who your new customers are in the new market:

• For what issue are you providing a solution?
• What task do they need to complete?
• What location are they in?
• Which hobbies do they have?
• What characteristics are ethnographic?
• In what sense would you classify them as such?

For your new market expansion, align yourself with a reputable research partner that can provide both qualitative and quantitative research. Additionally, you can have in-depth discussions with potential clients in new areas by sitting down with them. Using this data, you may map the customer journey, ideal customer, personas, and go-to-market plan, and you can test this as part of your research.

3. Observe the Competition

You’ll conduct competitor analysis as part of your research. Conducting a thorough competitor analysis is essential for researching current companies in the new market you have chosen. You will be able to comprehend the market and the competitive landscape better if you have a thorough awareness of your rivals’ brand promises, value propositions, and offerings.

Your offering, value proposition, and go-to-market plan must be robust enough to outperform and outlast well-established competitors. It is a riskier proposition for the company to enter this market if price is your primary point of differentiation and you will have to purchase significant brand awareness.

Make use of your research to ascertain what has to be improved or changed in your company before going public.

4. Choose Your Market Entry Strategy

You can develop your market strategy if you have a clear understanding of what success looks like, who your audience is, and the state of the competition.

You must consider your brand hierarchy and architecture when deciding whether to join a new market and whether to invest in a new brand or leave things as they are. You might even wish to collaborate with an established brand in that industry.

To assist a new audience understand and identify you in crowded markets, you must maintain control over the way your brand is presented and your visual identity. Using automated meta-data among other things, you may take pre-existing collateral and templates and adapt them for new markets with a platform like Brandfolder Content Automation. Such functionality speeds up and lowers the cost of establishing a market position.

It is expensive to enter a new market, particularly if done incorrectly. You may grow your company by entering new markets if you plan ahead, carry out in-depth research, and have a clear go-to-market strategy.