Blog - Strategy

When you believe “there is a market there”, first test your assumptions- then enter

Posted by Laura Rainati on Jul 20, 2012 5:53:00 PM

Many companies combine “feeling” with the evidence that a “bunch of their competitors are already in the market” and make the fateful decision “we need to go chasing the opportunity, too”! As a second step, they start looking for agents, distributors, or other local parties that can assist in the new market.

We call this an opportunistic approach, meaning that  you are making decisions based on gut feeling without really knowing what opportunities and risks are out there in new markets for your company. Maybe it goes well, maybe not.

We believe that a company rarely has the luxury of understanding this only afterwards.

Our experience shows us that companies that successfully enter new markets adopt an analytical and structured approach to identify whether there is an opportunity in the new market for their specific company and whether the projected result justifies the efforts and the investments to get there.

In order to be able to measure the success of the initiative, for instance, you, together with your team, First need to define what would make the new market entry a successful project at least in terms of level of sales, minimum margin, level of investment.

Secondly, you want to understand what type of opportunity (if any) is there in the new market.

To be able to understand this you need to answer 3 sets of questions::

Who are our potential clients?

  • What are the segment of clients present in the market?
  • What is their size?
  • Where are they geographically located?
  • What are their buying criteria? And are those any different from those of the home market?


Who are our competitors?

  • Who are our competitors for each of the identified segments? (those are usually different)
  • What sort of products do they supply the market with and at what price?


How does our product position in the new market?

  • Can we differentiate from our competitors? And if so, how does the new market perceive us? Is the market willing to pay us a premium?
  • Will our  products be accepted  by the market or would those need to be changed in some way? Is it going to be a big change or a minor one?
  • What certifications/labels are necessary to be able of selling products?


Only at this point , going back to the goals that you and your team set at the beginning,  will you be able to say whether there is an interesting opportunity for your company in the new market or not.

What we have seen in our experience is through using a systematic process based market approach companies know clearly what to do, where to start from, and where to go to acheive their “share” of the market thus avoiding expensive and risky opportunistic trials.