26 May 2022
Five things to consider when entering a new market
Consumers nowadays live in a hyper-connected world that enables them to move around more freely without remaining tethered to a single location. Through the digital realm, consumers and brands have diluted geographical boundaries and with this opportunities and expectations have emerged for brands to facilitate multi-market demand.
Many brands have already seized the opportunity to gain a presence in global markets in the digital era, and according to Bank of America 55% of companies are planning to expand into new markets within 2023. However, entering and succeeding in international territories is often complex, requiring brands to break through competitive, logistical and legislative barriers, all whilst gaining the attention and trust of local consumers.
So, what are some of the most significant considerations for brands seeking to enter new markets?
1. Get to know your consumers. Understanding the values and trends that drive action into your target audience is key to making data-driven and informed decisions. Companies that conduct in-depth research into consumers’ behaviors and needs, as well as their purchasing power and intent, can not only adjust their offering accordingly, but are also more likely to implement the right pricing, distribution, and advertising strategies to maximize conversion. Such research should center around the local market in order to capture the correct insights to drive results.
2. Localize, localize, localize. Consumers want to feel comfortable buying from a brand; they look for a shopping experience that feels both smooth but also familiar. To offer this, brands need to tailor not only their products or services to local preferences but also consider the end-to-end customer experience, adapting all customer touchpoints including payment solutions, currencies, website design and delivery methods accordingly.
For example, alternative-flavored KitKats are highly popular in Japan, informing a market-specific new product development roadmap for Nestlé resulting in flavors ranging from strawberry to soy sauce. Similarly, where Klarna is one of Europe’s favoured buy-now-pay-later payment solutions, in Asian territories Atome leads the BNPL market.
Language is the foundation of communication, and by extension of the relationships brands build with their consumers. Leveraging the expertise of a language service provider - such as THG Fluently - ensures your brand can be positioned as authentic to the target market, gaining the trust of consumers and maximizing the potential for success. Whether reaping the SEO benefits of local-language search results, or triggering an emotional connection through a branding campaign, localization is central to succeeding in new markets.
3. Assess the competition. Your target consumers may or may not already have similar products and services available to them. So, no matter the potential of your brand and offering in matching the demands of your audience, if this demand is already met you must analyze the competition thoroughly to assess whether your product is strong enough to draw consumer attention away from known and trusted brands within the region. . Where such competition exists, differentiation becomes crucial to success in new markets. Whether through product personalization, new product development, or aligning brand values with those of the target consumer, without a creating a unique value proposition that resonates with the local audience, your brand risks being second choice to those already established in the market.
4. Comply with local rules and regulations. Every country has its own laws, and to successfully and smoothly enter a new market, companies need to make sure they comply with local policies, procedures and regulations. From tax obligations to product development, compliance is a vital aspect across the different functions of a business. Taking an example from the beauty industry when it comes to product label compliance, where the EU require colorants to be listed in any order referencing the color index (CI) number, in the US businesses need to follow FDA guidelines instead. An organization that fails to do so can face consequences from fines to legal action that can instantly impact their market reputation and speed-to-market progress, so companies need to ensure they are on the same page with local standards and requirements to enable their operations to grow smoothly.
5. Identify the right distribution channels. With most consumers expecting fast and free deliveries, businesses should look to optimize their supply chains, whilst keeping costs down. When setting up in a new locale, many companies find it effective to partner with local distributors and courier services not only to take advantage of their market knowledge but also to significantly shorten delivery times, which contributes to boosting customer satisfaction. Where brands may opt for Evri (formerly Hermes) or DHL in the UK, their courier provider of choice in India may instead be Blue Dart. At an earlier stage in the supply chain, brands may also look to warehousing solutions such as automation through robotics, or exploring whether there is a near-to-market warehouse where they can store products to reduce the distance between product and consumer.
The journey brands take to enter and thrive in new markets is no doubt complex, with multiple factors to consider and address even before committing to international expansion. With this often comes multiple relationships with several vendors across technology, fulfilment and digital solutions to be built and maintained across the business. Partnering with experts is key; but partnering with experts that can cover the end-to-end solution under one roof can make a complex journey far simpler.
At THG Ingenuity, we’ve helped dozens of brands across beauty, retail, FMCG and beyond launch and succeed in new markets with our end-to-end ecommerce solution. If you want to know more about how we can help your business meet its global ambitions, get in touch.
Want to discover more about reaching global audiences? Download our comprehensive guide to entering new markets and start your journey today.