Entering a new market is always tricky. Entering a new market in a country filled with customers who think differently, have different cultural norms, and speak an entirely different language is very tricky, and perhaps can appear daunting from the outside. A market penetration strategy is often the go-to in this situation, but if that new market brings with it a set of languages, customs, and ways of looking at the world that are new to your brand’s current way of thinking about marketing, more consideration needs to be taken.
There are countless examples of otherwise successful U.S. brands that have attempted to expand into new regions only to retreat because they couldn’t enter or create a market for their product or service, and there are as many reasons why global expansions can fail. Maybe the messaging didn’t resonate, or the local incumbent was too entrenched.
But the one that is easiest to avoid is failing to put in the time and effort beforehand to plan and research new market opportunities, and making sure you’re reaching out to multilingual audiences in a way that will resonate with them. Smart brands that do their homework and engage new cultures with localized content and native brand experiences that reflect how different audiences live, act and speak, can reduce the risk of market penetration (which is normally associated with higher capital expenses) while potentially increasing the reward by attracting and retaining new customers, and thus, driving global growth.
Here are three key things to keep in mind when pursuing a market penetration strategy on an international scale:
1. Look at the Demographics
It’s never a bad idea to get the 30,000-ft view of a market before diving in. Think broadly about your potential customers: how does the market break down in age, gender, ethnicity, income, and other broad census categories — is there a population to support your brand? If potential customers are limited to one gender or another, a certain income level, and/or ethnicity, and fall within certain generational age, be sure that the demographics of the market aren’t unusually thin in those areas.
Next, hone in on individual regions; by definition populations are homogeneous when viewed at a national scale, but when you look at different regions within you’ll encounter varying levels of conformity or diversity. This is crucial knowledge, since it can help you develop a positioning strategy and determine whether you want to launch broadly on a national level, or take a more surgical approach, only targeting specific segments or regions.
It’s also important to get a feel for regional customs, local dialects, and how buyer behavior might differ from region to region within a country. Seek outside expert advice on this if it’s not already available in-house. This will help you craft native brand experiences that are personalized and speak specifically to a particular market or region, thus helping those messages resonate with customers there.
2. Calculate the Addressable Market
Once you understand the geographic area in both general and specific terms, you’ll be able to zero in on the total size of your target market. If you are planning to enter a country or region that has a radius of 20 miles and a population of approximately 100,000 people, that doesn’t mean the entire population fits your target market; you need to revert back to the census data for this specific region. If you don’t accurately measure the size of the market, it will skew your other predictions, making it more difficult for your expansion to be a success.
3. Project the Cost-Benefit
Finally, you need to make the call on whether or not the market penetration strategy makes sense financially. Is it likely to net more revenue than it will cost to successfully enter? Even if the market is right and there’s a demand for your product or service there, the timing may not be. But also keep in mind that the benefits in the future may be worth a higher cost up front.
The metric for this is simple enough to calculate: if success requires converting a number of customers that is greater than the high end of the likely market penetration range, then the probability of success in the given market is low.
Once you’ve used the above tips to determine the right market to penetrate, it’s important to make sure all content coming in contact with new consumers is localized for those persons — in other words, adding the appropriate cultural nuance to translated content. The first two areas you’ll want to focus on localizing are websites and apps — while for many your brand’s website will be the first place they go to engage with you, mobile adoption is increasingly on the rise, particularly in regions of the world where many people are coming online for the first time. In these areas, many are skipping desktops all together and connecting to the internet entirely via mobile devices — focusing on only your website and not your app would leave them out.