What are the questions that you need to ask yourself before entering a foreign market?
A Foreign market is any market that is not within the same country as a company. Most business owners usually wish to expand their businesses internationally. This kind of business expansion is quite reasonable because every successful business needs to grow beyond its native environment. When you take a company from a country to another, it stands a better chance of generating more profit for you. One other reason for international trading includes having a higher tendency to access the benefits of competition in business.
International marketing is doing business across countries or nations. Unlike domestic marketing, global marketing involves higher risks. It is essential that a firm do some research and careful analysis before selling any kind of goods or service in another country. For any organization to successfully enter a new world, it needs to provide answers to some critical questions. Below are the questions any business owner needs to ask before joining a foreign market.
QUESTIONS ABOUT THE COMPANY
These are the set of questions about the company itself.
- Is my business financially ready for this expansion?
- Do I have enough financial power for a long-term commitment to foreign exports?
- How much would we have to spend on insurance, foreign taxes, shipping, import duties, overseas distribution, and storage?
- Will all expenditure still leave room for competitive pricing and a reasonable profit margin?
- Do we have efficient leaders (business owners and managers) that can solve problems that we may encounter?
- Is the company prepared to get external management support where needed?
- Do we have enough and efficient human resources for sales and marketing?
- What other personnel do we need for this vision?
PRODUCTS AND SERVICES;
- Are our products and services fit into the competing business environment?
- Peradventure there is a need for rebranding, are we set for this?
- How do we aim to get distributors? Delegates from the company need to establish a relationship with key contacts in the new country. These people will serve as links to the new business environment. They will help to educate you on the local business rules and ongoing competition. It is through these key contacts that you may get to meet with your distributors.
When organizations have been able to provide answers to those questions, the next set of questions should be about the target country or countries.
QUESTIONS ABOUT TARGET COUNTRY OR COUNTRIES
It is wise to start by finding the perfect market for your business. You need to do a thorough search for the country where you will best carry out your business activities. When that is done, you can go ahead to asking questions about that place. Asking the following questions will help;
- How easy is it to do business there? Consider the risks and potential opportunities for your business in that country.
- Are there growing demands for your products and services there? If there is a high demand for what you sell, then, you have a greater chance to meet their needs.
- Are there laws prohibiting international marketing? Companies need to investigate whether some acts are against business internalization or not. If they allow, to what extent? You need to do a rethink if the country of choice prohibits foreigners from setting up businesses in their place.
- Are you aware of terms and conditions like licensing, allows taxes and tariffs in that country? There is a need to emphasize this point. Investors need to put into consideration the cost of licensing and allows, especially where the Government of the country only allows foreigners to sell products exclusively through their own home companies. Where tariffs and taxes are on the high side, it could be difficult for business to thrive.
The best way to understand the people of a place is to have detailed information about them. The marketing team of a company needs to learn a lot of things about the citizen of their target market. They should ask the following important questions;
- What is the culture of the people? Knowledge of the culture of these people may influence your marketing techniques and branding styles.
- What language do they speak or understand? Knowledge of the language and its interpretation is fundamental in international marketing. When people give a wrong description to your product, your business may crumble as a result.
- What is their taste like? You need to be sure you know how the people will love to have products presented, in terms of colour, size, shape or functions. A factor like tactile taste can spell doom if the eating habit of that place condemns the taste of your product.
- Do you have information about the demographic features of the citizens? Demographic characteristics of the population is a factor you ought to consider before entering their community for business. For example, the literacy level of the population plays a crucial role in determining what kind of product will appeal to them. For instance, you do not expect high sales for computers where a sizable percentage of the population are not computer literate. Other demographic factors that one should think about include the predominant ages or age group, sex, marital status, religion, occupation, level of education, etc.
Firms proposing to expand their horizons across other territories need to understudy the economy of the new place. It is essential to ask the following questions about the economy of the new country;
- Is the per capita income for the state favourable for business? The peer capital income is a ratio that tells how wealthy a country is. The financial capability of the inhabitants of a land will determine the quantity and the quality of goods and services they can afford. It is wise to consider this significant factor when planning to enter a foreign market.
- What is the socioeconomic class structure of the country? Business owners need to know the percentages of people in the low, middle, and high socioeconomic classes. Knowing this will give you an idea of the number of your potential customers.
There must be some levels of stability for any nation to have remarkable progress. The absence of war and crises in a country has a lot of positive effects on its economic state. Managers of the business should ask;
- Are there frequent incidences of political unrest or wars in that country? Crises of various kinds are common occurrences in some places all over the world. Organizations aiming to sell in such areas must be prepared to handle the challenges that come with instability.
In conclusion, wise investors and business owners do not need to lose their hard-earned resources before they decide whether to venture into international marketing. You do not need to waste your inputs entering into the wrong market. Why do you have to go where you are not wanted? What organizations need is proper planning — providing answers to many questions which we have mentioned will be helpful when planning for foreign market entry.
- Working from home and achieving success … But How? - May 21, 2020
- How to handle event cancellation due to unforeseen circumstances - March 30, 2020
- How to find sponsors for your networking event? - March 12, 2020