You have your eye on a new market. You’re certain your products or services are a perfect fit. But to get there, you’ll first need to develop a strategy.
A market entry strategy is a key tool for clarifying what you aim to achieve and how you’re going to achieve it when entering a new market. While an export plan tends to focus on just a few products or services, your market entry strategy will provide you with a roadmap for your whole business.
A typical market entry strategy can take six to 18 months to implement. It’s well worth the effort because it will ensure you have the best distribution channels in place, launch the right product and align your goals with those of your stakeholders.
Here are six steps you can follow to build a winning market entry strategy and start exporting into previously unknown territory.
1. Set clear goals
Be specific about what you want to achieve in your new market, including the level of sales you can expect to reach. Do not lose sight of your goals as you flesh out your strategy to help you stay on track and confirm that your opportunity, products/services, and overall business goals are aligned.
2. Research your market
Use every means at your disposal to get to know your new market including:
- doing online research
- going there in person
- attending trade shows as a participant or exhibitor
- learning about the competition
- making business contacts in the area
When getting to know your market, it’s important that you also learn about the social, cultural and political climate. If you’re entering a region with a different language or cultural norms than Canada, think about how you’ll communicate with key contacts.
Explore all of the rules that could affect your product and how you produce and deliver it. You’ll also need to understand your labeling requirements to ensure your packaging complies with local regulations. Learn about different distribution channels, too. At this stage, it’s advisable to seek information and counsel from embassies, consulates, and industry associations.
3. Study the competition
A detailed competitive analysis based on your research and visits to the target market will help you make key decisions—for example if you need to modify your product or service to customize it for that market.
Most businesses underestimate the degree of competition existing in new markets. Getting expert advice can help clarify the challenges.
4. Choose your mode of entry
There are many ways to enter a new market. You can use the services of a distributor or agent located there. You might become a franchisee or acquire an existing business. You can even construct an entirely new brick-and-mortar facility.
A lot of companies start by going into the U.S. first—and most choose to partner with an existing distributor. If you choose that path, make sure your strategy includes a unique value proposition for the distributor. Your partner will want to understand what’s in it for them, and how your product or service is different enough to stand out in the marketplace, but not so different that buyers won’t understand what it is.
5. Figure out your financing needs
Find out if you’ll need to get any financing to support your export venture. You may also want to get the insurance that protects your company against losses when a customer cannot pay. EDC offers credit insurance that can help you avoid cash flow issues when an international customer fails to pay.
6. Develop the strategy document
Once you’ve worked out the details of your strategy, you’ll be ready to write it out. Once created, this document will be your blueprint going forward, detailing your goals, research findings, contacts, budgets, major action items and timelines, and how you’ll monitor and evaluate your success on an ongoing basis.
It’s important to follow your plan so that you aren’t overwhelmed in a new market.
Have your accountant, lawyer and an external specialist review your strategy. You want to ensure you haven’t missed something that will prevent you from entering the market, or require you to pull back after you get there.