Today’s post is by Juliana Pereira, director of marketing, Smartling.
If you’re planning to enter new markets overseas, you’re likely looking to leverage market penetration strategies as a means of gaining a foothold. There are endless examples of brands that have tried to replicate their success in the U.S. in a new country only to fail – and as many reasons why that happened. However, there are a few clear steps you can take in the early planning stages to help tap into the potential of the new market and reduce the chances of your market penetration strategy falling flat.
#1: Plan to localize.
As you identify potential markets for expansion, make sure you set aside time in the process to localize the content you’re going to use there as it’s created; as the adage goes, if you’re not going to do something right, don’t do it at all.
Localization entails layering appropriate cultural nuances on top of content translation, and the first two areas on which you’ll want to focus your localization efforts are Websites and mobile apps. The Website localization ensures that all the other non-text elements are culturally appropriate for the new market. It’s important to consider the navigation, graphics, audio, and site architecture and adapt them to local markets.
Connection speeds vary locally, so the size of files and images and their impact on load speed should be considered so your site can be viewed in regions with lower bandwidth and slower connection speeds. The most important thing to keep in mind during Website localization is making sure site visitors can use and interact with the Website in a way that is natural and meaningful to them.
Mobile apps are also key – and becoming more so every day: the number of mobile app subscribers equals approximately 95.5 percent of the global population (seven billion). More than half of those are located in Asia Pacific. Further, the number of subscribers in Africa and the Middle East is accelerating quickly: according to Ericsson’s November 2015 Mobility Report, smartphone subscriptions in the Middle East and Africa region will grow more than 200 percent between 2015 and 2021.
#2: Consider the demographics.
Think broadly about your potential customers and how the target market breaks down in categories like age, gender, ethnicity, income, and more. In short, is there a population there to support your brand? If potential customers are limited to a subset of one or more of these categories, be sure the number of applicable buyers in the market isn’t thin in those areas.
Next, hone in on that market’s narrower regions; by definition, populations across a country 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 – targeting only 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.
#3: Understand the addressable market.
Once you determine the geographic area on which you want to concentrate, 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 encompassing a radius of 300 miles and a population of approximately 2,500,000 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.
#4: Run a cost-benefit analysis. Run it twice, in fact.
Eventually you need to make the call: does the market penetration strategy even make 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: The future benefits may be worth a higher up-front cost. 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 – and, unless some form of presence in the region is a key piece of the brand’s future strategy – you should probably refrain.
An untapped market won’t always be the right one for expansion; there are a lot of variables around brand, economics, timing, and more. But, if you plan properly, execute effectively, and make sure the content with which consumers will interact is localized properly, you’re bound to experience more success penetrating markets and engaging with customers there.