In the digital age, business knows no borders. Or does it? In the quest to succeed in new markets, many companies rely on global growth strategies, ignoring or downplaying country-specific factors. Yet getting to grips with the realities of a new market are key to long-term success. Fortunately, gaining the necessary insights may be as simple as considering a few key signals.
Most businesses have a set of global strategic principles – guidelines which steer the organisation’s growth at the broadest of levels. While effective for developing numerous business-centred factors such as corporate culture and effective management styles, a global perspective often becomes less effective when it comes to seeking out new growth opportunities – and particularly new markets.
However in today’s competitive and dynamic marketplace, companies’ success relies more and more on just that – the willingness to both seek out and make the most of new ways to grow, even if that means venturing into unfamiliar territory.
So, how can organisations set themselves up for success? What guiding principles should they use when it comes to honing in on the markets or regions ripe for expansion? While there are a few approaches, a tactic known as market scoring can be particularly effective when it comes to shedding light on new business opportunities.
Intelligently evaluating how to grow
A good step when expanding is to get to grips with the structural and macro drivers at work in a new market, region or company. This will help shed light on consumers’ needs, readiness for a new product, openness to new market entrants, as well as the overall size of the market as a whole, among others. Market scoring is therefore something to consider, as the process involves assessing a given market’s viability and growth potential, helping organisations decide on both if and how to enter.
Market scoring factors
Market scoring is an innately data-driven process. Some aspects that go into the calculation include:
- Market sizing – This involves estimating current total market revenue for the category/business type in question and given audience sizes for a product or service. Tools such as Similar Web and Google Keyword Planner can help you gain an idea of your company’s size in relation to its market and competitors
- Demand assessment – Evaluating active demand for the brand and category, as demonstrated by search volume, share of search and category search volume.
- Performance rating – Looking at historic performance of the product/service category, taking account of things like market conversion rate, average order value and new user percentage.
Understanding factors like these can be immensely beneficial, helping a business gain insight into key factors such as existing product penetration in a given jurisdiction or buyers’ price consciousness for a particular category of goods or services, among many others.
What types of businesses are most likely to leverage the market scoring approach to their benefit? Ecommerce brands, SaaS companies, and other organisations that offer online products or services are among those that are more suitable for scaling internationally, putting them in a position to be able to reap the rewards of this approach. These types of companies are able to conduct their business without concern over border restrictions or the demand for a complex infrastructure in place. For example, if a shopper orders a pair of shoes online, the product is simply delivered to them via a postal service.
Conversely, businesses within regulated industries such as finance or healthcare, are forced to face a different set of challenges because the stricter regulations inevitably lead to difficulties with cross-border selling. However, traditional service and consumer goods companies can also gain valuable insights into prospective markets, uncovering new levels of clarity about not only the number of prospective new consumers in a market, but their tastes, habits, preferences and more.
Scoring and prioritising markets: deep dive
Consider an ecommerce business looking to expand into new European markets. Not all opportunities are likely to be created equal. Which countries should the organisation choose?
After a market scoring analysis, things are likely to become clearer. Countries with high levels of demand (defined by category search volume, share of search) will be possible targets, as will those which are high performers (defined by conversion rate, average order value and new user rate). Big markets (defined by audience size and category revenue) will also be considerations, simply based on the number of total potential consumers. The top opportunities? Large, high-demand, high-performance markets.
Of course, there may be some trade-offs. Lucrative but limited markets will be those which are high performance but low demand. Focus markets may offer low performance but will still offer high demand and significant size. Others, the so-called laggards, will be those which are both low-performance and low demand, and which should likely be passed over.
In practice, balancing opportunity size with demand will be a key part of the equation. As will understanding velocity of change when it comes to changing market dynamics, trend spotting (and hopping) and the ability to capitalise on other opportunities.
Going beyond market scoring
Market scoring is highly instructive. Yet companies should also consider a few other market-specific factors when seeking out new markets for growth. Among them:
- Market complexity: is entering the jurisdiction easy or challenging? Will operating there be straightforward or more involved? What can be done to smooth the way?
- Information visibility: business success so often rests on budgeting/financial transparency, clear roadmaps and effective performance reporting. Will these be achievable in the market in question?
- Stakeholder inclusivity: every market has its own nuances and ways of doing business. Ensuring the needs and wants from all perspectives are considered will help create an effective process, promoting buy-in from both local markets and business stakeholders.
Towards a clearer view of the opportunities ahead
Managed from six hubs around the world, operating in over 100 markets, and drawing on the talents of over 2,500 digital freelancers, at Croud we understand the complexities of operating – and growing – a truly global business.
As more and more organisations shift perspective on which markets they service and how, competition is likely to heat up as new entrants offer exciting new products and services, challenging existing market players. If you’re looking to compete in the new era of borderless business, intelligently expand into new territories and gain a deep understanding of the opportunities and challenges involved, Croud can help guide your approach. If you would like to discuss your growth challenges and aspirations, get in touch.