Market Selection and Analysis

Regardless of the countries chosen, the process of analysing and selecting the most appropriate countries for international expansion is one of the most overlooked, yet critically important decisions any business can make.

Overwhelmingly, the natural tendency of Australian business intending on expanding internationally is to select the largest market they can find and “go for it” - China and India often appear on the top of such lists.  The United States and the United Kingdom seem like safe options but often aren’t ideal either.

Accurate selection of prime target markets demands consideration of a broad range of issues which, of course, includes the market potential.  However, potential is not a real measure of market attractiveness and, therefore, priority - consider other issues such as the cost of business establishment and operations, ease of market penetration, regulatory structures, consumer purchase power, cultural factors, language and even odd issues such as time zone differences and how communications will be managed - these all play a role in determining which markets to tackle first and which should be secondary priorities

Today, the ease with which some highly robust market selection analysis can be undertaken is very high.  The web provides massive amounts of highly useful information if you are prepared to hunt for it.  And often it reveals things you wouldn’t expect.  Take, as just one example coffee - which country’s citizens consume the most coffee?  Americans? Italians? Brazilians?  Actually, Italy and the U.S. rank 11 and 12 in the world rankings and Brazil doesn’t even crack it for mention in the top 18 in the data we have seen recently.  Who’d have thought Norwegians are the biggest consumers of coffee in the world at a staggering 10.7kgs per person.  It’s easy to see how perception, hearsay and folklore can lead to some incredibly inaccurate assumptions.  The lesson - use data, not gut feel.

Accuracy is paramount in considering all the factors for market entry and prioritisation - no less so in some of the softer measures businesses might consider.  Cultural factors play an incredibly important role in determining a market’s attractiveness yet, surprisingly; these are often overlooked.  Businesses with significant international aspirations would do well to consider the degree to which cultural factors might influence their ability to do business in a particular country.

Quality analysis is hard - there are no shortcuts, however, by simply focussing on the small number of factors which really determine a market’s attractiveness and putting aside preconceptions and assumptions, business planning international expansion can build a far more accurate and, potentially profitable, list of target markets.

 

David Stafford

David Stafford is an Executive Consultant at DC Strategy.

DC Strategy is the region’s leading specialist consulting and legal firm. Our specialist teams in Strategy, Franchising, International and Legal have developed the networks and brands of many of the region’s most successful businesses. Contact David Stafford at david.stafford@dcstrategy.com