When a company decides to expand and enter into a new market, it is always in dilemma to choose the right path; be it setting up of dealer network, setting direct exports, partnerships and alliances. Bonafide helps clients in selecting the most profitable business model. 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. We carry out following five steps to properly assess the opportunities and risks of a new market.
1. Define the Market
Clearly defining your market may seem like a simple step, but before you identify who you want to sell your product to, it is difficult to understand their needs. We consider the demographics, location, and common interests or needs of target customers.
2. Perform Market Analysis
Expanding into new markets involves a great deal of market research in addition to target customers. We develop an in-depth understanding of market growth rates, forecasted demand, competitors, and potential barriers to entry. This is particularly important to enter a relatively undefined market.
3. Assess Internal Capabilities
Much of decision on how to enter a new market (organic growth, joint venture or M&A) is driven by an internal capabilities assessment. During this stage, we analyze questions like: How much of our core competencies can we leverage? Do you have sales channels/ infrastructure/ relationships in place? What time-to-market considerations exist? Moreover, check with the feasibility, suitability and acceptability of each strategy.
4. Prioritize and Select Markets
Once we’ve completed the market analysis and internal skills assessment, it is time to prioritize potential markets for expansion. Markets are prioritized based on the strategic fit and the ability to serve them. We answer questions like: Are there gaps in this marketplace that you can fill (and do so better than your competitors)? What value do you deliver to this market and how much are they willing to pay for it?
5. Develop Market Entry Options
Once an attractive market is selected, we determine the appropriate level of organic investment vs. expanding through a series of acquisitions (or some combination of the two). 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.