Concept testing is a crucial stage when developing new products. Before you launch a new product in the market, you must understand how your customers will respond and how the product will perform.

Concept testing helps you avoid costly errors and nasty surprises; it is much better to understand your market and make a more confident and successful product launch. In this article, we’ll show you how concept testing works and how to do it. Let’s start with a more in-depth definition.

What is concept testing?

A concept is a precursor to every great product. It’s a detailed outline of what you’re going to produce, who it’s for, the problems it will solve, how it will work, how much it will cost, and much more.

To ensure your concept is ready to go to market, it’s essential to test it properly with real customers. This process is called concept testing, and in the rest of this article, we’ll talk about why this is so important and how to do it methodically.

The benefits of concept testing

Concept testing is the process of testing your concept before launch, so you can confidently put it into the market with a pretty good understanding of how your customers will feel and how they will respond.

There are several different methods spanning both qualitative and quantitative approaches (which we’ll dive into shortly). Still, they all involve presenting concepts to consumers and getting feedback about different attributes.

(Check out our detailed guide to concept testing for more information.)

There are multiple reasons to do concept testing, such as:

You get real feedback from users. Designers and product teams are often too close to the product to make clear-headed decisions, and they might overlook some crucial things. Concept testing allows you to access honest feedback from your target customers, which you can’t replicate with your internal team.
It helps you notice flaws. No concept has ever been perfect. Testing your product with real users enables you to detect problems that flew under the radar in the design phase, giving you many new pairs of eyes.
It allows you to refine your concept. Before testing, your product is a rough prototype with all the major pieces in place, but it probably needs some extra work. By shedding light on what consumers think, testing gives you some direction for refining and improving your product so that it’s more likely to gain traction when it hits the shelves.

The importance of concept testing

The above benefits are essential for many reasons. Here are some of the reasons why you should consider concept testing in new product development:

It’s easier to get backing for your product. Testing gives concrete data about how customers feel about your brand’s products. You can then use this data to make a compelling case to others in the organization about why you are making certain decisions. With this data, it’s no longer a matter of personal opinion, and it will be much easier to convince others.
It helps you find out what your customers like the most about the product. Concept testing is beneficial not just for that specific product and how to market it but also allows you to make better decisions in the future by focusing on the things that people like most and targeting popular pain points with different products.
Testing can help you segment your customer base. Who should you target with your product? If specific demographics love the product and others are less enthusiastic, this is extremely helpful when focusing your marketing and distribution efforts.
It helps you estimate how many sales you’ll make and the ROI you’ll generate with the product when it goes to market. This is helpful when setting budgets, making plans, and getting financial backing from others in your company.
It allows you to identify a reasonable price point. It’s common to ask users how much they would expect to pay for a product during testing. This helps inform your decisions about how much to price your product.

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How to test concepts: the qualitative and quantitative methodologies

Concepts can be tested quantitatively or qualitatively. Qualitative methods for concept testing include focus groups, online communities, and in-depth interviews that allow you to uncover rich qualitative feedback from current or prospective customers relating to your planned product. Ethnography or self-ethnography are other alternatives, particularly if the concept you’re testing is worked up and in prototype form that consumers can interact with at home.

The primary quantitative method used for testing concepts is an online quantitative survey, an approach that allows you to test at scale.

Different approaches for testing concepts

There are four main approaches for concept testing a new product, each with its pros and cons. It’s best to consider your specific situation and then pick one which works best for concept testing your product.

Monadic testing

Monadic testing is where the audience is divided into groups, and each group is given one concept in isolation and asked to evaluate it via a series of questions.

For example, they might be asked to rate the design, evaluate the price, or give feedback on the packaging.

The pros of monadic testing are:

There is less room for order bias since the concepts are shown and evaluated in isolation.
It’s easier for users — they only have one product to focus on, and all the questions apply to that product.
It encourages more profound feedback as users dive deeply into one concept instead of skimming over several different ones.

On the other hand, the main drawback to monadic testing is that it requires a larger sample size to get enough reliable data. It can be costly to gather all the necessary participants and challenging to find enough people to assess niche concepts.

Sequential monadic testing

In sequential monadic testing, multiple concepts are evaluated one after the other. Each participant sees two or more concepts presented in random order. Participants answer questions about each one in turn.

The main benefit is that fewer people are needed, so this results in the following:

Being cheaper to gather enough people and set up the testing
Taking less time to collect a sufficient amount of data
It also works well with niche markets where there might not be many potential customers

The main downside is that it takes longer to carry out each test since participants evaluate multiple concepts instead of just one.

Comparative

In comparative testing, concepts are shown next to each other, and participants evaluate all of them at the same time. It’s an effective way to find out how one concept compares directly against another in the eyes of your customers.

The main advantage of comparative testing is that it’s suitable for measuring small differences and drilling down into the specific advantages and drawbacks of each product. The main downside is that its comparative nature means it’s not very effective when both products are flawed.

Comparative testing is often used as a follow-up for monadic testing to gain deeper insights into a specific product.

Proto monadic

Proto monadic concept testing is a blend of monadic and comparative testing. Customers evaluate a product via monadic testing and then are shown the same product compared to another.

It’s done to confirm the initial monadic results to gain a more sturdy overall conclusion about a product’s strengths and weaknesses.

What to measure

Once you have settled on a testing method, it’s time to consider what you want to measure. There’s a long list of possible factors to analyze with concept testing, and these might vary based on your chosen method.

Here are some common examples of things to measure:

Overall reaction to the product – this measures how customers feel about the product overall and can be measured with a Likert scale (a series of options from “strongly agree” to “strongly disagree”).
Reaction to different elements of the product – you can also use the Likert scale to rate specific aspects of the product, for example, the packaging, ease of use, battery life, and more.
Need for the product compared to the current market – how much demand does your participant think there is for the product? Is there an urgent need for it, or is the market already saturated with similar products?
Comparison with other products on the market – how does your product compare with what’s already out there in the market? Is it a significant improvement on what exists, worse, or just more of the same?
Likes and dislikes – what are the individual things people like and dislike about the product?
Purchase likelihood – this is where you ask your respondents to rate their likelihood of buying your product. You can use a Likert scale for this (“very unlikely” to “very likely”).
Pricing analysis – how much would your participants be willing to pay for the product?
Likelihood of use – how much of a need does your participant have for the product, and what kind of role would it play in their lives?

(Check out this article for examples of how to test new product concepts.)

Testing your concepts is crucial if you want to release the best products to your target market, market them effectively, delight your customers, and see your revenue soar.

How can we help?

It’s crucial to do concept testing properly, so your new products have the best chance of success when they eventually hit the market. To find out how Kadence can help you deliver this, request a proposal or contact the Kadence team here.

Conducting market research on an international scale is an increasingly common requirement. Global markets are more critical than ever, offering growth to businesses facing domestic stagnation or saturation. But international market research can be a challenge to get right. This article explores the top 5 challenges in international marketing research and our top tips for overcoming these.

What are the top challenges in international marketing research?

#1 International markets are incredibly diverse.

Some brands fail to appreciate the diversity within a region or country. You can only get an accurate picture of what people value and whether your products and services might succeed by rooting out the nuances of different geographical areas, cultures, and consumers.

#2 There can be a temptation to go too broad.

Linked to this, sometimes, when companies set out on international marketing research projects, they make the mistake of going too broad and trying to understand a region as a whole. Another error we see is firms commissioning research to target one market and then using this as a jumping-off point into others with “similar” attributes. This inevitably leads to costly mistakes as brands map their assumptions about one market onto another.

To avoid this, be clear on the emphasis of your research. Where are you looking to focus and why? Looking too broadly across a region of different markets, or exploring how an entire product range might perform, can cloud the picture.

# 3 Finding the right research partner.

The next big question is whether you have the research capabilities to conduct meaningful projects internationally. Most brands and their research partners can run domestic research projects with ease. But if you’re in the US or UK, say, going as far afield as Japan, India, or Germany requires different sensibilities and capabilities. The more international you get, the harder you must look for that kind of experience and expertise.

#4 Bringing together local and global expertise.

Misalignment is one of the biggest challenges in international market research. To overcome this, there must be a collaborative effort and a shared understanding of the mission, methodology, and insights. A research team at HQ might work with a local marketing team to understand how to position a product for success in an emerging market. But if the teams are siloed and don’t have a consistent understanding of the brief, their approach to researching the market and their findings might not help deliver on the challenge.

#5 Ensuring the project is realistic from the outset.

This is where all the other challenges in international market research come together: which markets, what purpose, the capabilities available, and the effectiveness of the output – all within a budget that makes sense. There will always be limits to what’s practical – and the last thing any client needs is to spend large sums testing international markets to no effect.

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Meeting the challenges in international marketing research – tips and tricks from our experience in the field.

Get the brief and the scope right.

The more you can nail down exactly what you need to know and about which markets, the better your international market research will be. The key here is to dismiss the idea that lessons from one market can be overlaid onto other markets. Your approach might not even work in the same region, much less globally. So ensuring the brief isn’t burdened with too many assumptions, and is very clear on objectives, is key.

For research into one new international market, the brief can be clear-cut. You’ve picked a new place to trade, and you probably have some specific questions. Will the branding work? Do we need to alter the packaging? Are there particular features we need to tweak? But as soon as you broaden the scope – to, say, three new markets covering a region – the nuances become more critical in the research brief.

One solution is to ask questions at every stage. Why these three markets? What are they like? What do we need to know about purchaser sentiment there? How will a research project change what we decide to do in each market? Companies that are open with their agencies on operational and marketing strategies – rather than prescribing research about the areas they know matter in their existing markets – will see more effective results.

Understand the cultural nuances you’ll face

Everyone knows instinctively that cultural differences are both a factor in conducting meaningful research internationally – and a major reason for doing that research in the first place. ‘Market immersion’ is a key concept, and that’s all about getting to grips with the cultural context. But local nuances within new markets can catch people out.

In South Africa, for example, there are multiple cultural groups. Having local knowledge of how to tease those out is vital to breaking in South Africa.

That means one of our jobs as global research partners is challenging clients at the briefing stage to ensure these considerations are baked into the research approach and the analysis and interpretation of the results. The good news is that when you have research experts living and working in these markets as we do, cultural nuances are easier to plan around. We use this inside knowledge about people’s lives to help understand opinions, habits, and behaviors.

Don’t think language is just about translation.

Companies are often wise to the importance of understanding ‘culture’ and, as a result, adopt a cautious approach. But one mistake people make in international market research is to assume that ‘language’ is more straightforward – or that it’s just a question of running a survey or its results through Google Translate. But that’s never a good idea. It requires a much more nuanced approach.

Language isn’t just what we say but how we say it. And local variations within international markets – think Swiss German or Quebecois French, but the list is endless – further complicate the issue.

You’ll need the nuance: go regional.

Understanding local culture and language are essential in its own right. They’re also the gateway to getting out of the big cities and understanding the whole market. Tokyo is a true megacity – but it doesn’t reflect all of Japan. Paris is iconic – but its citizens have very different values to those in Marseilles, let alone rural France.

Here’s where you need to understand geography and supply chains. If you’re moving into a new international market in a limited way – or if the distribution is going to be impractical outside conurbations, say – then researching inside big city bubbles might work just fine. But for national penetration and in markets where businesses or consumers are more evenly distributed, understanding attitudes and behaviors across the country is a must.

For brands with an existing presence, existing assets on the ground are a hugely valuable resource for understanding these nuances. That could be local-office marketers or salespeople. Distributors and major customers can also offer insights. We love to work with chief marketing officers (CMOs) who have a helicopter view of a region and are clear about strategic objectives. But triangulating between them, their local marketing teams, and our local research teams in the field tends to generate better results.

Decide on the most effective methodology.

Another significant benefit of having local teams in place like ours is that they have expertise in the best methodologies to use in different markets. This is sometimes a subset of culture, but in other markets, it’s driven by the levels of technology adoption, geography, or working practices. Some examples:

In Indonesia, face-to-face research is considered the norm; telephone in-depth interviews tend to deliver a poor hit rate.
In Japan, groups respond better to moderators of the same gender, and people are more likely to undertake qual work at the weekends.
It’s not acceptable for researchers to interview women in the home one-on-one in Saudi Arabia. And across the Middle East – and many other regions – mixed-sex focus groups tend to be a no-no.

You can read about others in our guide to conducting online market research in Asia.

This is also why more open briefing processes can be valuable in international research. It’s too easy to apply a blanket methodology across a whole region and end up struggling to execute the research. Better to frame the key questions the organization needs to answer and tailor the research study to each key market.

Calibrate your responses.

Cultural and language shape the way you ask questions, and they’re huge factors in interpreting any research results, too. A keyword search on a crude translation of responses could mean missing crucial insights – or, worse, coming to incorrect conclusions.

And don’t think this only applies to qualitative, descriptive research where local idiom, slang, or cultural references might catch you out. International quantitative research also has to be calibrated by analysts with an appreciation for local nuance.

Respondents in some markets are more likely to agree with statements than others. For instance, you’re more likely to see people agree with statements in India than in Japan. Even the way you phrase questions – not just translate them, but the nuance in the question itself – will affect the consistency in scores you can achieve between different cultures.

That’s particularly important for big global brands with a very set idea about how they do their brand equity or NPS studies. The alternative is to develop a more organic approach so that the questions allow you to reflect local nuance. It might be as simple as using a four-point rather than a five-point scale in markets where respondents are most likely to sit on the fence.

Use market research as a tactical, not just strategic, lever.

It can be tempting to seek broad answers from international market research: “Will this product work in this market?” Or: “How should we tweak the service offering to meet this country’s needs?” These will help brands decide on strategic issues. But the more nuanced the approach, the more likely it is that the research will feed into local tactics for a brand, making its international investments work even harder.

That’s a common theme in research: properly granular insights ought to help with several decisions. It’s not just a ‘go/no-go’ binary, but research should inform everything from pricing to choice of distribution channel, support for local sales operations, to targeted advertising.

A new era for international research

We’ve moved on from an earlier era when global brands assumed continent-scale uniformity. Even if a business sees an opportunity in ‘Latin America,’ has an ‘Asian strategy’ or issues financial reports for ‘EMEA,’ serious decision-makers know they need to go, at the very least, to the country level for insights that will help their plans succeed. And they understand that it can be counter-productive to seek out ‘apples to apples’ comparisons between markets when a little nuance can go a long way.

More recently, one factor that’s complicated the picture is the global Covid-19 pandemic. Because so much commercial activity is managed remotely, there’s a temptation to run multi-market studies with a uniform online methodology. If everyone in the world is attending focus groups via the same videoconferencing app, what’s the difference?

The risk here is that the vast advantages of technological solutions are watered down in the hunt for low-cost, ‘big picture’ regional results. Online research can be conducted quickly and flexibly. And clients can immerse themselves in research projects more easily, gaining their own insights into consumer reactions on the other side of the world.

But research that is tailored, for example, to local respondents’ cultural norms will yield much better results. You can quickly adapt a methodology to a market when you have local research expertise and a clear idea of the brand’s mission. For instance, recognizing that in India, you’ll need to avoid any methodologies that rely on lengthy video inputs, and instead, combining text, image-based and short video tasks will get you the insights you need.

The most successful companies understand that an international project is more complex than handing a research agency a questionnaire and generating uniform results across every territory.

You know your product or service better than anyone. We know the right questions and methodologies to get you where you need to go. Our local teams understand the cultural norms, and good translations – culturally and linguistically – can bring it all together. Find out about the regions where we can conduct international market research or get in touch to speak to us about an international project

Have you heard the story about Steve Jobs dismissing consumer market research as a tool to shape new products? The driving force behind the Mac, the iPod and the iPhone famously said in a 1985 Playboy interview, “We were the group of people who were going to judge whether it was great or not. We weren’t going to go out and do market research.”

It is, of course, one of the most widely debunked stories in business. Apple does conduct consumer market research – and is, arguably, in its pre-eminent position precisely because it innovates using insights generated by analysing in incredible detail its consumers’ behaviours and the market appetite for its products. (There’s video of a young Jobs extolling the virtues of market research for these purposes – it’s 90 seconds well spent.)

The fact is, most new products are very similar to things people have seen before. For every genre-busting innovation there are tens of thousands of new iterations of existing ideas, tweaks to brands and updates to proven sellers. In most cases, some kind of market research will have shaped the new iteration and how it was conceptualised; helped stand up the business case for it; framed the marketing; and guided its introduction to consumers. So how does market research help businesses design and launch successful new products?

Using market research for product development at each stage of the innovation funnel

There are lots of different ways to describe the innovation process, broadly broken down into three phases: ideas, concepts and creation. It’s not a science with a standard formula, however, but there are some common steps. For example, some experts recommend breaking the process into 5Cs:

Capture intelligence about market gaps and organisational potential.
Connect opportunities to capabilities.
Convert ideas and available resources into concepts for products.
Confirm these products are viable in the market.
Conclude by executing a market entry plan for them.

Another way of thinking about it is a series of questions that need to be asked at each stage of the product development process. Market research can help answer them all.

1: What’s the opportunity?

Desk research, analysis of existing customer data and some qualitative investigation can help frame likely areas for innovation. In many cases, an organisation will face an internal problem – overcapacity, falling margins, consumer appetites shifting away from existing products – that also frame the need for new products. The output here is an extrapolation of big trends to identify emerging needs, changing behaviours and whitespace for innovation.

2: What ideas might thrive there?

In some organisations, internal R&D will have a ready supply of potential innovations that might be applied to the opportunity. More likely, R&D and marketing teams will benefit from a brief developed from the ‘opportunity’ phase to direct R&D in more concrete areas. This process might include brainstorming inside the organisation or more formal ideation sessions with an external research agency. At this point surveys can be harnessed to give more shape to the ideation process. In the search for an iterative new product (rather than a genuine technological innovation) there might be 30 broad ideas that can be tested in quantitative surveys to thin down the field.

3: What concepts deliver on those ideas?

In the next stage, focus groups and market analysis can clarify which concepts ought to progress further by exploring the strengths and weaknesses of each idea. This is also where the innovation and R&D efforts of the business are properly moulded around consumer and market insights – and some iteration takes place to align the two. Note that research here isn’t just among consumers in the core market. Channel partners, consumers and suppliers in adjacent industries are all valuable sources of insight and inspiration. For example, when Kadence worked with an airline to develop new first and business class seats, we looked to bedding experts, audiophiles and high-end restaurant maîtres d’hôtel to shape the concepts.

4: How might those concepts perform in the market?

By this point, an organisation should have narrowed its ideas down to a small number of solid concepts. At this stage, a large-scale quantitative survey can be used to identify the concept with most potential to take forward, as well as the size of the potential customer base.

5: What’s the investment case for launch?

The insights gained from market and concept testing will allow numbers to be attached to the product at this point. What might revenues be? What’s the cost to produce the product or service? With research around pricing, what’s the margin likely to be? Does this justify retooling a factory or investment in marketing? This is the “go/no go” point for a new product.

6: What should the final product look like?

Using the research on market potential and consumer attitudes to the new idea, a business can shape decisions on final feature set, ancillary products or services (again, both quant and qual market research will illustrate the need or potential for these), packaging, marketing and pricing.

7: How do we get it out to market?

Research can also highlight optimum product launch strategies, including distribution, adverting and partnerships to make the most of both existing markets and potential follow-ons – whether that’s mass-market adoption for a product designed initially for a niche or early adopters; new demographic segments; or launch into different international markets.

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The known unknowns for new products

There are broadly two types of business keen to answer these questions. First there’s the radical innovators, the people who come up with brand new ideas and product concepts and want to understand whether they stand a chance in the market. This group are interested in ‘unknown unknowns’, the broader trends in consumer behaviour that might hint at acceptance of a brand new idea. We’ll come on to these Steve Jobs types later.

The second, much larger, group understands the innovation funnel in more detail and seeks data to optimise a pipeline of new products. They are interested in ‘known unknowns’ and using the answers to justify, shape and execute a launch.

For this group, the challenge is modelling the potential performance of a new product against a number of variables already visible in the market. These organisations often have a sophisticated process in place to test new ideas and are keen to benchmark any new product in order to validate investment. They will have an algorithm for product development. The more variables they can pin down using market research, the higher the confidence in making those investments.

‘Benchmarking’ in this case might be looking at the performance of products within the target market; or evaluating consumer attitudes to particular features or benefits. This makes it a largely quantitative methodology.

This kind of quantitative approach is often applied with good reason. Standardised questionnaires and clear, consistent methodologies can help ensure that the market research process is more reliable and easier to interpret. And for many larger organisations with a wide portfolio of potential innovations, a fixed investment budget and the need for reliable returns, this rigour can be highly valuable.

But beyond simply looking at the “go / no go” result, it’s important to dig into the reasons why products didn’t pass this hurdle. This can provide valuable insights to inform future development.

Competitor analysis can also reveal opportunities for developing successful product iterations. Research might include:

Rivals’ marketing strategies – what’s their targeting and messaging; what are they missing?
Customer satisfaction with competitor products– where are there discontents that might be satisfied by your product?
Other gaps in the market – such as different price points or localised versions for international consumers.
Other competitor strengths and weaknesses – consider brand halo effects or financial status.
Early-adopter behaviours – in similar markets or using new technologies that might be adapted to your own target markets.

A word of warning – New Coke and the importance of taking the right approach to market research for new product development

But it’s not always done right. There’s no shortage of case studies of new product launches that didn’t go well. And often that’s not because an organisation didn’t do any market research. It’s because they didn’t use it deftly enough.

New Coke is a great example. Coca Cola is an innovative business and wields one of the greatest brands in history. In the 1980s, management decided to rebuild its dominant position with a new formula. Clearly this was a huge decision, and as a market research powerhouse, it took no risks. It spent $4m on development and conducted over 200,000 taste tests across the US to research how consumers would score the new flavour against rival Pepsi. And based on those tests, New Coke was going to be a hit.

But management made a series of errors. In a classic case of confirmation bias, they tended to put more weight behind positive views expressed in focus groups, ignoring those who warned a change would turn them off the brand. They discounted emotional feedback on their brand. And they over-focused on differentiation with Pepsi, which had long marketed itself as the sweeter product.

One big mistake was conducting sip tests instead of researching how consumers would feel drinking a whole can of the sweeter formulation. But narrowing down their research focus – ignoring the context for consumption – they ended up launching a product that turned consumers off the brand altogether.

The error, then, was not failure to conduct market research. It was failure to treat research objectively and apply appropriate methodologies. Management sought justification for their decision – not confidence that it was the right one.

The impact of market research on new product development – giving you the confidence to guide a product launch

The key word here is ‘confidence’. Even iterating an existing product entails risks. Using market research for product development helps reveal and manage that risk – and allows decision-makers to test rigorously against hypotheses for new products, rather than head off down potentially blind alleys.

Note that qualitative research plays a crucial role in helping product developers fine-tune their approach and create innovations more suited to particular audiences. And as the New Coke example shows, qual research can capture the emotional components of product change much better than quantitative analysis might. Every new product launch is a balance between gains and losses for the consumer and understanding that balance is vital.

When it comes to qualitative research, organisations shouldn’t just ask themselves whether to conduct it, but how to conduct it. Whilst central location testing for instance, allows you to ensure the product is experienced in a consistent way during the testing process pandemic lockdowns have obviously accelerated this shift towards at-home testing. New technologies are helping. Augmented reality (AR), for example, is an ideal way to help consumers visualise new products even at the concept stage. Using their mobile phones, they can ‘see’ products in their own home or a work setting, providing valuable depth to qualitative studies at even earlier stages. This is something we’ve piloted with Asahi to test their London Pride packaging and are seeing a number of benefits, such as respondents using AR organically noticing and commenting on small visual details that aren’t picked up by other respondents assessing a 2D concept.

Using market research to guide blue-sky thinking

So we can test against quantitative benchmarks to validate new product development. And we have qualitative studies to test emotional reaction to new products and shape their evolution in ways that will make them more successful. There’s also a third way of using market research for product development: coming up with new ideas in the first place.

This is often called ‘ideation’ and it’s an area where market research has played a key role since the birth of the industry – regardless of what Steve Jobs said. He was right that consumers are typically quite poor at predicting what might define or satisfy meet their own future needs. But understanding how R&D and human appetites come together is core to the market research offering.

Take a dairy business, as an example, that’s facing a slow decline in consumption. One solution would be to increase the appeal of organic products. How might they craft a brief to their own product development team?

Working with Kadence, the company use a structured approach to frame where this innovation might gain some traction in the market. Using proven research techniques, they also explored possible options for further innovation. These can be tweaked and repositioned using further research.

This approach can be further optimised if like us, the research agency has an in-house creative team that can quickly visualise concepts based on consumer feedback. We worked with a global beverage brands wanting to relaunch its range to make this happen. Based on focus groups, we were able to redesign the packaging in a matter of hours in a way that capitalised on insights from the research.

One other process to consider: the ideation sprint. Rather than gradually piecing together some R&D, market analysis and internal feedback before gradually building out a new product for consumer testing, this involves getting all the stakeholders into a project group together to develop new ideas within a short timeframe.

Kadence has conducted these sprints with food manufacturers – where that combination of chefs, technicians, marketing experts, salespeople and researchers working in concentrated bursts over a couple of days can see a menu of ideas created, tested with consumers and refined incredibly quickly. And because these sprints are cross-departmental, buy-in for the new product internally is much greater.

Concluding thoughts

Product development is risky even when you’re not launching a category-busting innovation or changing the world. New flavours, revived branding, tweaked feature-sets or version updates can upset existing product performance or result in costly investment in ideas that might not fly.

Far from stifling product development, market research can deliver reassurance and confidence at every stage, helping inform the choice of new products to pursue, their key attributes, how they might be marketed and what contribution they make to a business operationally and financially.

This is an area where Kadence has extensive expertise. Find out more about our product development research services or get in touch with us to discuss a brief.

Whether it’s an entirely new geographical region with a range of cultural, linguistic, and economic factors to consider or just a new age demographic — breaking into a new market is rarely easy.

There are all kinds of risks to try to mitigate and hurdles to overcome. Brands will never manage to avoid every potential pitfall, so a degree of complication should be expected.

Businesses that can minimize these risks and challenges can reap serious rewards. In this article, we’ll look at 5 of the biggest risks and barriers businesses typically face when entering a new market.

Let’s start with the risks.

The risks of market entry

There’s no risk-free way to enter a new market. Some may be easier than others, but problems are always possible. We can break down market entry risks into three main categories — internal, external, and legal.

Internal risks for market entry

Internal market entry risk factors are those that come from within the organization. These are generally easier to control than external risks but are often unpredictable and seriously damaging.

Management and organization

How well is your company structured? In your home market, it’s sometimes possible to function successfully with a flawed organizational structure. However, those drawbacks can become painfully obvious when you enter a new market.

Some common management mistakes include:

Unclear vision from leadership. A lack of coherent vision from the people in charge can lead to widespread confusion and inefficiency. Ensure your goals are established and communicated to everyone on the team.
Sudden staff changes. When a new member joins the team to replace someone else, they must have all the necessary information and direction. Failing to do this can often result in failures in communication and significant setbacks when entering your new market.
Lack of coordination. Working together effectively is critical in a new market — especially one far away from your home market. Your team members must be on the same wavelength, up-to-date with current processes, and in regular communication with each other and leadership.

Human error

Human error is one of those risks that we can’t always control. Mistakes happen in business and life, and while we can’t predict them very accurately, we can certainly say that people will make mistakes.

When entering a new market, a simple mistake can set a project back and send out ripples into the entire process. Usually, one or two small mistakes won’t mean the end of the world, but a series of minor errors can add up.

That could involve failing to convert currency accurately, using the wrong measurement units, or giving incorrect advice about cultural norms. In these cases, one small mistake can quickly snowball into a major setback if nobody catches it.

Logistical issues

Things like delays, accidents, labor shortages, transport and delivery problems, and other logistics and infrastructure challenges can be significant roadblocks for businesses when entering a new market.

These hurdles are especially relevant when expanding into developing countries and regions. Here, infrastructure and technology are often very different from what you might be used to in your home market, so it will be harder to predict delays and disruption.

Markets in developing countries sometimes use more manual processes, so there is often a greater need to work closely with local teams and sometimes the need to adapt your services.

Tech issues

The technology and equipment you rely on as a business won’t always work seamlessly. One considerable risk for market entry involves technology failing to get the job done effectively in a new market.

One example is the Internet of Things devices, which can be powerful assets for businesses when monitoring conditions and optimizing processes in manufacturing. However, if your devices or networks fail, it could cause a significant setback.

If you’re looking to enter a developing country, it’s worth bearing in mind that technological infrastructure can differ greatly from your home country. In some countries, we’ve seen a leapfrog effect, where newer technologies have been adopted to a greater extent, as there are fewer issues with moving away from legacy systems.

Cash flow problems

Entering a new market requires a lot of financial resources, and if the supply of money is interrupted or halted, it can cause major problems for your operation. If not promptly dealt with, internal issues like this can quickly stop a market entry attempt.

External risks for market entry

Businesses must contend with many external risk factors and risks that stem internally within their organization. These can be much more difficult to control and are often unpredictable.

Regulations

It’s essential to be aware of and comply with the local laws in your chosen market. One recent example is Europe’s GDPR law which requires anyone doing business with European customers, or any company based in Europe, to adhere to strict data privacy rules.

Local regulations and requirements are often overlooked — and this can be especially tricky in emerging markets where regulations can be harder to interpret if you’re unfamiliar with the landscape.

Failing to keep up with regulations can be high — the maximum fine for GDPR violations is €20 million or 4% of your annual global revenue. A mistake here can seriously damage your entire company, not just your new market activities.

Politics

Politics can be hard to predict anywhere in the world, although businesses can be reasonably confident that radical changes won’t disrupt their market entry efforts in stable regions.

However, all bets are off in less stable parts of the world. Revolutions, wars, and sudden and significant new legal changes are just some of the political risks you must contend with when entering a new market.

Sudden changes to government can have severely damaging effects on your business. One example is when Fidel Castro’s government took control of Cuba in 1959, seizing hundreds of millions of dollars of US-owned property and companies.

Social unrest

A country (and a market) is nothing without its people. Events involving social unrest and widespread disruption are constant sources of risk for businesses in many markets around the world.

Riots, protests, and revolutions can cause damage to premises and shut down businesses for long periods, while nationwide strikes can leave you without a workforce. It’s crucial to have a plan of action to ensure survival during civil unrest.

Major non-violent social movements and trends can also impact your business. If you fail to show solidarity or are perceived as insensitive to a specific public sentiment, this could cause reputational damage.

Cultural differences

Entering a new market often involves introducing your business to an entirely new culture, which comes with a whole host of new risks.

Brands need to be aware of different customs and cultural nuances. Failing to adapt can impact how your products and services are received in the new market. You’ll need to consider how culture will affect how your new customers will receive your marketing. A television commercial beloved in Western cultures might be perceived as grossly insensitive in more conservative cultures.

It’s easy to get excited about entering a new market and the potential it might offer your business, but you need to do your research upfront. Is there actually a market for your product? Will it need to be adapted for success? And at what point does this become unfeasible?

Knowing when not to enter a market is just as important as knowing when to invest.

Natural disasters

It isn’t just people that businesses have to worry about when entering a new market — nature itself is often working against them. Natural disasters are a significant source of risk when establishing a presence in certain parts of the world.

Hurricanes, earthquakes, floods, droughts, and many other disasters can quickly stop any market entry effort. They can destroy property, interrupt shipping, and close down entire economies in hours. Worst of all, it’s often impossible to predict when the next disaster will strike.

One way to mitigate damage is through insurance, although coverage in developing countries has historically been low. Research shows that only about 1% of natural disaster-related losses between 1980 and 2004 in developing countries were insured, compared to approximately 30% in developed countries.

Market issues

There are several external risks in the market. These can take the form of unexpectedly tough competition, fluctuations in the cost of services and resources your business relies on, and volatile exchange rates, leaving a dent in your profit margins.

Legal Risks

There are many legal risks to consider when entering a new market, and this type of risk encompasses internal and external activities.

Every region in the world has its own set of laws and regulations, which can change significantly even between parts of the same country. For example, it’s legal in many U.S. states to sell cannabis; however, this could carry a severe penalty in others.

Some legal risks to consider are lawsuits, patent rights, and data privacy regulations. To ensure you stay on the right side of the law, you must work with local lawyers in your target market. A major legal setback like a big lawsuit could end your market entry campaign, so ensure you stay on the right side of local laws.

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Barriers to market entry

As well as risks, there are also multiple market entry barriers to consider. Fortunately, these are far more predictable than the risks mentioned above. It’s almost guaranteed you will encounter these obstacles during your market entry journey, so it’s easier to prepare for them.

There are many barriers, but we will cover two of the main ones here – costs and marketing challenges.

Costs

Entering a new market is a costly endeavor. You’ll generally need considerable resources to make this happen, and costs can be much higher than expected.

Some market entry campaigns cost less than others — trying to reach a domestic demographic with your product is more financially workable than establishing a solid presence in a foreign market such as China.

A successful market entry will allow you to make back your investment over and over. But it’s important to understand what costs you might need to consider when entering a new market.

Export and import costs

Moving to a new overseas market typically involves a certain amount of moving goods across borders. Even if you establish a manufacturing base in your new market, there will be costs associated with importing certain materials and goods from your home market.

Switching costs

This refers to the cost involved in switching to a new supplier, brand, product type, or alternative. You might have to do this a number of times when entering a new market, and these costs can add up quickly.

Marketing costs

Reaching your target audience in a new market will require a certain level of expenditure, depending on how well-known your brand is. For example, KFC opening a restaurant in a new region will have less work to do than a smaller and less famous company. Costs include market research, advertising, digital marketing, and analytics.

Access to distribution channels

This is how you make your product available to your customers. Accessing and managing a distribution infrastructure in a new market comes with various costs.

It’s important to anticipate as many costs as possible when entering a new market. Even if you do a great job of this, it’s likely that some costs will still spring up and take you by surprise. Make sure you have the financial resources available to handle these unexpected expenses.

Getting your marketing right

As well as the many costs associated with market entry, another barrier facing companies involves marketing.

Marketing is essential to make your voice heard and your product known in your new market. You need to immediately start connecting with your target customers across various channels and establish your brand as an option.

Marketing in a fresh market comes with a range of challenges. We already covered costs above, but here are some other key marketing considerations:

Demand

Before you even set foot in a new market, do enough people want to buy your product? Your marketing campaign will be an uphill struggle if there isn’t existing demand for your offering. It’s much easier if people are already clamoring for what you have. This is where market research is crucial for helping you to size the opportunity.

Competitors

Entering a new market means — most of the time — walking onto another company’s turf. You’ll need to show your target audience that you can offer something better than your competitors.

Brand identity

Your brand has an identity; it can take a lot of work to import that identity and everything associated with it into a new market. How do you establish yourself in a certain way and send out the right message to your potential customers? Again market research is vital here to understand what to retain and what to adapt.

Customer loyalty to existing companies

We already mentioned your competitors. Many of the customers in your new market will have existing loyalties and strong ties to them. Luring customers away from a brand they have used and loved for decades is much more complex than simply attracting a new customer to your brand. You must stand out, offer something extra, and communicate this clearly. It’s worth paying attention to your competitors and what people like about them.

How will you reach your audience?

Consider how the people in your new target market get their information and spend their time. For example, if you’re targeting an older demographic, investing heavily in influencer marketing might not be a good idea. On the other hand, magazine and TV ads may work to great effect.

Cultural issues

If you’re expanding into an overseas market, you’ll need to consider the differences in culture and how this affects the tone of your marketing. Make sure your messaging doesn’t come across as offensive or inappropriate or appear tone-deaf due to a lack of understanding about cultural nuances and norms. Understanding cultural differences is an area where it pays to work with people who understand the culture intimately. Take the case of Starbucks — whose attempt to break into the Israeli market fell flat due to hubris and a lack of understanding of what the Israeli customers wanted.

Marketing can take a lot of work to get right, which is even more true when entering a new market. The most important thing is to research your new market as heavily as possible and gather as much information as possible before beginning your campaign. Also, be prepared to adapt your approach as you go along in response to data and feedback.

Market entry always comes with a massive amount of risks and challenges. No business can escape this, not even those with a global presence.

But when you get it right, you can reap significant rewards.

Kadence has helped companies of all shapes and sizes research their target markets and gather all the intelligence they need to lead an informed and successful market entry campaign. To find out how we can help you do the same, check out our guide to market entry or get in touch today.

As internet penetration has increased across the world, online market research has seen rapid growth. The COVID-19 pandemic acted as a catalyst for further adoption as restrictions on face-to-face contact meant that businesses had to embrace new research approaches. The result? Many companies experiencing the advantages of online research for the first time. What’s more, the widespread adoption of tech during the pandemic – particularly amongst audiences that were traditionally easier to reach offline – means that online market research is a now a viable way of engaging more people than ever before.

In this guide we’ll:

Explore the key advantages and disadvantages of online market research
Explain the different methodologies available to you and when to use them
Share our top tips for setting your project up for success, moderation and analysis

What is online market research?

As the name suggests, online market research is a type of market research where data collection takes place on the internet. In this way it differs from more traditional forms of market research where data collection takes places offline (either in person or over the phone) such as focus groups or telephone interviews.

What are the main advantages and disadvantages of online market research?

Advantages of online market research include being faster and in some cases, cheaper to conduct than face-to-face market research, meaning that you can obtain results more quickly. One of the major disadvantages of online market research is that it relies on the people you’re trying to reach having access to the internet and as such it may not be suitable for all audiences. Some online qualitative methodologies also require a degree of tech savviness, and a longer time commitment than offline approaches.

Beyond this:

Online market research is particularly useful for global projects. If you’re looking to enter a new market and don’t have boots on the ground, online market research can help you build your understanding without having to fork out for flights and focus groups. It’s also well suited to multi-market research as you can conduct research in a number of countries in parallel to identify common trends.
Online research can help you get closer to customers and bring them to life for stakeholders. In a focus group or a face to face interview, you only have a short amount of time to get to know respondents. In contrast, some forms of online qualitative research take place over a series of days, weeks or even months. This allows us to dig deeper and build a richer understanding of customers and their needs than we might offline. Some methodologies even allow you to set photo and videos tasks. These result in rich multimedia outputs can be used to bring customers to life for stakeholders.
Online techniques allow for a more iterative approach to research. The longitudinal nature of some online qualitative methodologies means that it’s possible to adapt your discussion guide as the research progresses to capitalise on emerging insights. This is particularly effective for product development research. For example, in an online community, you can share initial concepts with consumers, iteratively improve them based on feedback and then put them back into the community for further testing. This approach allows you to build and refine the concepts as the research progresses.
Online market research can be good for sensitive topics. Many online methodologies offer a greater degree of anonymity than face to face research. As such, they can be better suited to discussing difficult subjects such as illness or sex.

What type of business questions can online market research help me answer?

Online market research is extremely versatile and can be harnessed to explore a broad range of challenges, including:

Better understanding your target market
Product or service development
Brand and advertising research to guide marketing strategy
Determining customer satisfaction

What are the main methodologies used in online market research and when should I use them?

There are a number of different research tools you can use to collect data online. They include:

Online surveys

An online survey is the primary method for collecting quantitative data online. Online surveys can be completed by your customers or respondents can be sourced from an online panel (a group of people that have agreed to take part in online research). If you opt for this route you can build a representative sample and extrapolate your findings to the wider population.

When to use an online survey

To understand trends and patterns of behaviour e.g. buying habits
To understand attitudes towards your brand versus the competition
To compare different groups (e.g. by age, gender or market) to understand similarities or differences
To track metrics over time e.g. brand awareness, customer satisfaction

When to avoid an online survey

Projects where you need to qualitatively explore an issue with consumers to understand motivations and the “why” behind behaviours
Projects where you need to co-create with consumers to iteratively improve an idea

Top tips

It can be tempting to pack your survey full of questions but you need to be mindful of time. An online survey should take a maximum of 15 – 20 minutes to complete. Any longer than this and you risk seeing respondent fatigue or a significant proportion of people dropping off before the end. This will mean that fieldwork will take longer to complete.
Mix up the type of questions you use to keep the survey engaging for respondents

Online communities

Online communities are a qualitative technique for exploring a topic over a number of days, weeks or even months. Pre-screened respondents are invited to a secure online platform where they take part in a number of activities each day. This can involve discussing topics in groups, one on one or taking part in video, photo or audio tasks.

When to use an online community

To deepen understanding of a target audience
To explore content preferences and consumption
To test audience attitude and brand perceptions
To test new ideas with consumers – this can be anything from products and services to packaging or new marketing concepts. Online communities are particularly well suited to this. Many platforms enable consumers to mark-up concepts so you can gather in-depth feedback whilst also protecting the confidential nature of the stimulus, through functionality such watermarking or setting videos to self-destruct once they’ve been watched.

When to avoid an online community

When you need to explore a topic with consumers on an individual level

Top tips

Do your research on the types of platforms available. Each offer different functionality so go back to your objectives to ensure you’re selecting most suitable for your project and what you want to achieve.

Digital depths

A digital depth is essentially an audio or video interview which takes places online. These tend to last about 30 – 90 minutes. A typical programme might involve 15 – 20 interviews per market, although this can vary based on your business objectives.

When to use a digital depth

To explore in-home brand or product usage or explore attitudes towards particular brands or products
To gain B2B market insights

When to avoid a digital depth

Projects where you require respondents to share and bounce ideas off each other
Projects that require large sample sizes as running 100s or 1000s of depths online or offline is just not feasible

Tops tips

One of the challenges levelled against online research is that it can be harder to build rapport online. To overcome this, consider pre-tasks that allow you to get to know the respondent beforehand and help them feel comfortable. This can be anything from asking them to complete a short diary task to some quickfire WhatsApp questions before you get started.
Be aware of market differences. In markets that have traditionally favoured face to face methods, using video as part of a digital depth is a must for engendering trust.

Digital ethnographies

The objective of a digital ethnography is to view a consumer’s life as it happens. Ethnography emerged as an offline discipline, but developments in technology mean that it is now possible to conduct ethnography online. From 360 cameras to smart home technology right through to the humble old smartphone, there are a number of tools you can use. And in some cases, these new approaches can uncover insights that you just would not gather when there’s a researcher in the room.

When to use digital ethnographies

To explore in-home brand or product usage or to explore attitudes towards particular brands or products
To identify unmet needs
To understand cultural differences between markets

When not to use digital ethnographies

Projects where you need respondents to bounce ideas off one another

Top tips

Not everyone will be suited to take part in digital ethnography. You need respondents who are open and willing to let you into their lives. One way of doing this is to include a casting phase as part of the project to identify the right people to participate.

Online focus groups

An online focus group is where a group of pre-screened respondents are invited to join a private online platform for a few hours. Like an in-person focus group, a moderator will guide the discussion, which can be either text or video based.

When to use an online focus group

To test attitudes and responses to concepts and ideas at a high level
To sense check ideas quickly with consumers

When not to use an online focus group

To obtain detailed inputs from respondents at a one-to-one level

Top tips

If you are used to running focus groups in person, don’t automatically assume that online focus groups are the next best thing. Depending on what you’re trying to achieve, another methodology may better meet your objectives.
If you’re running a video based online focus group make sure that you’re able to see all of the participants at once. This will help in interpreting non-verbal cues and bringing people into the conversation.

Questions to ask yourself when designing your online research approach

As you can see, there are a number of different online methodologies available to use, each with their own distinct use cases, benefits and drawbacks. To help you design the best research approach, we’d recommend asking yourself 5 key questions:

What am I trying to achieve? Some clients come to us dead set on using a particular methodology. We’d advise against this. By starting with your business objectives and then considering which methodology best allows you to meet these, you’ll be in a much stronger position to design an effective research approach.
Do I need to collect quantitative or qualitative data? If you’re looking to conduct research at scale, you’ll need to opt for an online survey whereas if you want to explore a topic qualitatively, there are a number of different options available.
What depth of insight do I require? Are you sense checking an idea or do you need to explore needs in real detail? This will have implications for the methodology you choose.
Do I need to speak to consumers one-on-one or in a group? Different methodologies and platforms facilitate a different type of engagement with respondents. Think carefully about which you require up front.
Which markets am I exploring? Not every methodology will work in every market. There are cultural factors and connectivity issues you’ll need to consider. For instance, if you’re conducting research in India outside metros or tier 1 cities, you’ll need to make sure your approach is mobile optimised but doesn’t require too much bandwidth. Or if looking to test concepts in China, you’ll need to do so in a one-on-one setting due to the Chinese habit to moderate answers and avoid causing offence in group environments. Our guide to conducting online research in Asia, can help you consider the best approach to take in each market. Remember, if you’re running a multi-market project, you don’t need to use the same methodology in every country. Harnessing an approach that will ensure you can answer your business objectives is more important than consistency of approach.

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Setting your online research study up for success

So you’ve decided on the best methodology for your study. The next step is to get into the nitty gritty of setting up the project. Here there are a number of key things to consider.

Simplicity. When you’re writing your questionnaire or discussion guide, focus on making it as easy as possible to understand. Cut out the jargon to ensure a consistent understanding amongst respondents.
Flexibility. For online qualitative projects, it’s worth building in an element of flexibility into your discussion guide. This will allow you to delve into emerging insights during the course of the research.
Cultural nuances. We talked about the importance of culture when selecting your methodology. It’s crucial to bear this in mind throughout the entire research project. When you’re writing a questionnaire, preparing a discussion guide or designing specific tasks, consider how cultural differences might affect participants’ responses. For instance, in Japan people tend to avoid giving negative feedback so you use a traditional 5 point Likert scale here you’ll find that most people will answer somewhere in the middle, making it hard to ascertain the trend. To get a clearer go / no-go result, you’ll want to consider a 4 point scale in this market.
Testing and training. Some online qualitative research approaches rely on external technology platforms. Make sure you build in a comprehensive testing phase to ensure these work across different browsers and in different markets, particularly if you’re using a tool for the first time. You should also consider preparing training materials for respondents. What might seem intuitive to us as researchers, may be not be as straight forward for the person taking part in the research.

How to moderate online research

Moderation is arguably even more important online than it is offline. So what should you bear in mind?

Don’t forget the basics. Just because the research is taking place online doesn’t mean that you can forget everything you’ve learnt about great moderation. Dress appropriately and try and mimic face-to-face interactions – even something as simple as waving hello at the start of an interview can help to build rapport and set someone at ease.
Read the (virtual) room. Sometimes what people choose not to say can be as revealing as what they do.
Do your homework. Earlier in this guide, we mentioned the value that pre-tasks can bring. Even a short WhatsApp exchange can be useful in helping you to understand more about a respondent and how they feel about certain topics so you can get the most out of them in the session.
Curate the conversation. Unlike a focus group or an interview which might only last 90 minutes, online communities take place over a longer period and therefore require ongoing moderation. Moderators should think about how they curate the conversation by connecting individual respondents up to foster group discussion.
Conduct research in the local language. If you’re running a project in another country, use local language moderators who’ll be able to understand and draw out local nuances.

Analysing online research projects

Online market research is often considered to deliver more bang for your buck than a face-to-face approach because of the sheer amount of data you can collect. This is particularly true of online communities due to their longitudinal nature. As such, you need to carefully structure your analysis, ensuring you’re focusing on the ‘so what’ for your stakeholders.

There are also cultural considerations to take into account when it comes to analysis. You’ll need to bear in mind that consumers in different markets can answer questions differently when you’re interpreting the data. For instance, when asking about interest levels or purchase intent, the figures you see in ASEAN developing countries tend to be higher than in other markets. Even within markets, there can be regional differences to take account of. In Vietnam, for instance, there are cultural differences between consumers in the two major cities – Hanoi in the North and Ho Chi Minh in the South. Those in the North tend to favour products from well-known brands, while those in the South are more open to trying new things, and this is reflected in the data you see from these areas.

Considering harnessing online research in your own organisation?

This is where we’re in our element. Find out about some of our online methodologies like online surveys or online communities or get in touch to discuss a project.

How do you enter a new potential market?

Expanding your brand into new markets allows you to reach potentially vast numbers of new customers and grow your revenue massively. However, the process can be complex and filled with complications.

A market entry strategy maximizes your chances of success when moving into a new market. In this article, we’ll look at some reasons to consider moving to a new market, the differences between domestic and international markets, and some strategies you can use.

Market entry defined

Market entry strategy is a plan to expand the visibility and distribution of a product or service to a new market. Market entry research helps brands to expand into new domestic or international markets where the competitive, legal, political or cultural landscape might be less known.

Market entry research is the path to understanding a new market. It helps brands identify different success factors, reveal potential challenges, and discover hidden potential opportunities.

Why move to a new market?

First up, why should you consider moving to a new market in the first place? It’s challenging and expensive, so what are the reasons that make it worthwhile? Here are some of the main ones:

You’ll gain more customers and make more money – The number one reason to consider new markets is to grow your business and increase revenue by selling more products to more customers.
There might be no more opportunities for growth in your home market – If you’ve maxed out what your local market is capable of in terms of revenue, expanding to new markets may be the only way to grow.
You’ll reduce risk by diversifying your business – If one market suffers for whatever reason, you’ll have others to keep you going.

Domestic markets vs. international markets

Are you planning to enter a new domestic market or take your products overseas to sell in a foreign country? The approach for each of these will be very different.

Domestic markets

Typically, this will be much easier than entering an overseas market. The culture will be the same, everything will be geographically closer, and things will likely be very similar to your existing markets.

International markets

Global expansion is where things become more complicated. You’ll have to factor in several differences in how you currently run your business. These include:

Cultural differences
Administrative differences
Economic differences
Logistical challenges involved in transporting goods abroad

Things to consider

Before you enter any new market, it’s crucial to take some time to confirm whether you can afford the move. Can you afford the costs of exporting, working with intermediaries, tax, and all the other expenses involved? And what proportion of the market can you realistically expect to be able to serve?

You must also consider if the product or service will work in your intended market. Market research (both online and offline) plays an important role here — ensuring demand for your product justifies the export cost.

Risks of entering new markets

There are also numerous risks involved in entering a new market, including:

Country risks, like the possibility of political unrest, sudden changes, or financial issues that could impact your business.
Foreign exchange, such as the possibility of currency exchange rates changing, could seriously affect your bottom line.
Cultural risk, which essentially means the possibility of your new business venture running into challenges due to significant differences in culture and customs.
Weather unpredictability. Are you moving into a market where natural disasters and weather conditions could cause damage to your facilities and cost money?

Once you have carefully researched your new market and weighed the potential risks, you may decide it’s worth entering. If so, there are several different strategies you can employ, each with its pros and cons.

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Different market entry strategies

Direct exporting

Direct exporting is where you ship your products to the new market directly. You’ll have to handle all aspects of the process independently, from transport to payments to operations in the new market.

This method requires more resources and time compared to working with an intermediary. You’ll need to create an exporting infrastructure, train employees, and make and receive international payments, among many other challenging tasks.

On the plus side, this approach maximizes your profits as you don’t need to pay any third parties. You’ll also have complete control over your sales and marketing processes.

Indirect exporting

Indirectly exporting involves working with an intermediary. It has some advantages, such as:

Much lower risk. An experienced third party will take care of the exportation process, which minimizes the risk of failure.
You can focus on your own business and domestic markets without being occupied by your new ones.
Fewer resources are required on your part.

On the other hand

Profits are lower since you have to pay your intermediary.
You’ll be disconnected from your customer base, so you’ll miss out on important insights and lessons.
You’ll lose complete control over sales and marketing abroad.

There are several different options when it comes to indirect exporting. Here are some of the most common ones.

Indirect exporting with buying agents

Buying agents are representatives of foreign companies that want to buy your products. You’ll work through them when selling your products to your new market.

They’re usually paid by commission and will try to negotiate the lowest possible price. Sometimes, buying agents are government agencies.

Indirect exporting using distributors

You can sell your product directly to distributors or wholesalers, who will then distribute the product to retailers.

Indirect exporting through the management and trading companies

Export Management Companies (EMCs) exist to take care of all your export and sales processes in your new market.

It’s worth taking some time to research and find the correct EMC, as most specialize in a particular market and region. They’ll help you identify markets, find customers, handle all shipping and logistics, and more.

Indirect exporting through piggybacking

Piggybacking is where you allow another non-competing company to sell your product. This can work exceptionally well if the partner company already has a customer base and distribution infrastructure in your target market.

You’ll get immediate access to your new market but for a fee.

Producing products in the target market

Another option is to manufacture your products within the target market. This saves you the cost of transport and the many logistical challenges involved in exporting your product abroad.

However, you’ll also need to consider the many challenges in manufacturing your product abroad, legal issues, costs, possible risks, and more. Depending on your situation, this could be a good option.

(For more information on the most effective strategies for entering a new market, check out our top four marketing strategies article).

Franchising / Licensing

While franchising is often associated with fast food or quick-serve restaurants, it can successfully aid expansion in many different categories.

Franchising is where a semi-independent business owner (the franchisee) pays fees and royalties to the franchisor to use a company’s trademark and sell its products or services.

While franchising and licensing are both business agreements where certain aspects of the business are shared in exchange for a fee, a licensing agreement is typically more limited.

Entering a new market can be extremely rewarding and allow your business to move to the next level and achieve new growth. It’s essential to research all the options and ensure the export strategy you deploy is the safest and most effective for you. You’ll also need to thoroughly research the market to understand its potential and position your product for success, something we cover in our Ultimate Guide To Market Entry.

Kadence can help you do that. We have extensive experience assisting businesses by conducting game-changing research to create effective strategies for market entry. To find out more, learn about our market entry services or get in touch.

Quantitative research is an integral part of market research that relies on hard facts and numerical data to gain an objective picture of people’s opinions as possible.

Quantitative research differs from qualitative research in several important ways and is a highly useful tool for researchers.

In this article, we’ll take a deep dive into quantitative research, why it’s important, and how to use it effectively.

How is it different from qualitative research?

Although they’re both beneficial, there are a number of key differences between quantitative and qualitative market research strategies. A solid market research strategy will use both qualitative and quantitative research.

Quantitative research relies on gathering numerical data points. Qualitative research, on the other hand, as the name suggests, seeks to gather qualitative data by speaking to people in individual or group settings.
Quantitative research typically uses closed questions, while qualitative research uses open questions more frequently.
Quantitative research is excellent for establishing trends and patterns of behavior, whereas qualitative methods are great for explaining the “why” behind them.

Why is quantitative research useful?

Quantitative research has a crucial role to play in any market research strategy for a range of reasons:

It enables you to conduct research at scale.
When conducting quantitative research in a representative way, it can reveal insights about broader groups of people or the population as a whole.
It enables us to compare different groups easily (e.g., by age, gender, or market) to understand similarities or differences.
It can help businesses understand the size of a new opportunity.
It can help reduce a complex problem or topic to a limited number of variables.

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Quantitative research data collection methods

When collecting the data you need for quantitative research, you have several possibilities available. Each has pros and cons, and it might be best to use a mix. Here are some of the main ones:

Survey research

Survey research involves sending out surveys to your target audience to collect information before statistically analyzing the results to draw conclusions and insights. It’s a great way to understand your target customers better or explore a new market, and it can be turned around quickly.

There are several different ways of conducting services, such as:

Email — is a quick way of reaching a large number of people and can be more affordable than the other methods described below.
Phone — not everyone has access to the internet, so if you’re looking to reach a particular demographic that may struggle to engage in this way (e.g., older consumers), telephone surveys can be a better approach. That said, it can be expensive and time-consuming.
Post — as with the phone, you can reach a broad segment of the population, but it’s expensive and takes a long time. As organizations look to identify and react to changes in consumer behavior quickly, postal surveys have become somewhat outdated.
In-person — in some instances, it makes sense to conduct quantitative research in person. Examples include intercepts, where you need to collect quantitative data about the customer experience in the moment, taste tests, or central location tests, where you need consumers to interact physically with a product to provide useful feedback. Conducting research in this way can be expensive and logistically challenging to organize and carry out.

Survey questions for quantitative research usually include closed questions rather than the open questions used in qualitative research. For example, instead of asking

“How do you feel about our delivery policy?”

You might ask

“How satisfied are you with our delivery policy? “Very satisfied / Satisfied / Don’t Know / Dissatisfied / Very Dissatisfied.”

This way, you’ll gain data that can be categorized and analyzed in a quantitative, or numbers-based way.

Analyzing results

Once you have your results, the next step — and one of the most important overall — is to categorize and analyze them.

There are many ways to do this. One powerful method is cross-tabulation, where you separate your results into categories based on demographic subgroups. For example, of the people who answered ‘yes’ to a question, how many were business leaders, and how many were entry-level employees?

You’ll also need to take time to clean the data (for example, removing people who sped through the survey) to make sure you can confidently draw conclusions. This can all be taken care of by the right team of experts.

The importance of quantitative research

Quantitative research is a powerful tool for anyone looking to learn more about their market and customers. It allows you to gain reliable, objective insights from data and clearly understand trends and patterns.

Where quantitative research falls short is in explaining the ‘why’. This is where you need to turn to other methods, like qualitative research, where you’ll talk to your audience and delve into the more subjective factors driving their decision-making.

At Kadence, it’s our job to help you with every aspect of your research strategy. We’ve done this with countless businesses, and we’d love to do it with you. To find out more, get in touch with us.

Market entry is the process of entering a new market, whether at home or abroad. There’s a lot to consider when taking this step, and it’s certainly not a simple process. In fact, for every successful market entry, about 4 will fail.

A new market doesn’t necessarily mean a new geographical area. It could mean selling your product or service in a new language or targeting an entirely new demographic of people. If you do choose to move into a new part of the world — especially if it’s abroad — this comes with its own unique set of challenges.

In this article, we’ll dive into a market entry and some of the challenges involved. We’ll also cover some steps you should take to maximize your chances of success in your new market.

Why enter a new market?

There are lots of good reasons why you should consider expanding beyond your current market. Some of the main ones are:

You want to gain more customers, grow your company, and increase your revenue. This is the most obvious reason — new markets represent untapped opportunities for growth and to make more money.

You’ve hit a ceiling in your current market. Perhaps you’re struggling to grow more where you currently are, which is an impetus to seek out new pastures.

There may be a legal requirement to offer your product in new markets. For example, you might be required to sell your product in different languages.

To keep up with competitors. If your competitors are expanding into new markets, you risk being left behind if you don’t do the same.

Domestic vs foreign market entry

Domestic markets will likely be quite similar to your existing markets, whereas international markets present some new challenges to overcome, such as differing cultures, laws, and languages.

However, foreign markets can also bring great benefits and the opportunity to become a truly global brand. If you decide you are ready to take the plunge and expand overseas, this will come with a whole host of brand new challenges.

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How to excel at market entry

Research the market

What is the size of the market? What is its growth rate? Where is the market heading and what are the key trends to watch? These questions can help organisations understand the potential return involved in entering a new market and are typically answered by a combination of desk research, interviews with industry experts and primary research.

Research your customers and what they want

This is important at any stage of business, but it’s especially crucial when entering a brand new market. The more different your new market is from your current one, the more important this step is.

How do you get to know your customers?

Focus groups
Online surveys (and other quantitative research methods)
In depth interviews (IDIs)
Telephone depth interviews (TDIs)
Online communities (and other online qualitative research methods)
Ask your sales team for their experiences of customers’ opinions
Spend time in that market. There’s a lot you can learn – from better understanding consumer behaviour to getting a grip on the competitive landscape

In your research, you’ll need to consider a few key questions, such as:

Will your product work in the target market? What works well in your current market might not take off at all somewhere else. Is there any real demand for what you’re offering, and does it justify the cost of entry?
Will you be dealing with different demographics of people? Will they have different pain points, goals, and budgets? How will you address these differences?
Will you need to adjust your marketing strategy or move to new channels? For example, if you’re trying to move to an older market, social media marketing might not be the best approach to take.

Research the competition

Who are your competitors in your new market and what are they doing? These will likely be different from the competitors in your original market, but this may not always be the case.

Entering a new market, you’ll immediately be at a disadvantage to established companies. You’ll need to overcome customers’ long-term brand loyalty and familiarity with other products, and you’ll be competing with brands that already know the landscape well.

You’ll need to work hard to beat your competitors while also fitting into the new market. As such, it’s worth spending time and resources so you can find out as much as possible about your competitors and learn from them. One advantage of being a new entrant is that you can avoid the mistakes other players have made in the past, helping you to optimise your strategy and get ahead.

Understand the culture

When moving overseas to a new market, the cultural differences can be vast. If you want to succeed, you’ll need to make sure your business is on the same cultural wavelength as your new market.

This means adapting to the culture and customs. The best way to do this is by working with people on the ground – or indeed by spending time there and getting a feel for a new place. We have offices across Asia, the US and Europe, so when we work with clients on market entry projects, we’ve already got a deep understanding of the culture of the market they want to target, which can be a huge advantage.

Understand the local laws and regulations

When moving into a new market, the last thing you want to do is run afoul of the local laws. For example, the EU’s GDPR regulation, built to protect the data privacy of EU citizens, applies strict rules for businesses. Failing to comply can result in a hefty fine.

It’s best to work with a local lawyer who can advise you about all the regulations you’ll need to be aware of and help you navigate this new legal landscape.

Have a clear future plan

When you enter a new market, it’s important to have a clear idea about where you’re going. How are you going to grow and scale? 65% of startups fail because of premature scaling — how will you make sure you grow at the right pace?

Take some time to put together a clear roadmap and market entry strategy that will ensure you develop and grow in your new market in exactly the right way.

Entering a new market is always fraught with challenges. It’s best to work with a team of experts who can help you formulate a strategy that works — guiding you through the complex and demanding process of making a move.

At Kadence, that’s our job. We’ve worked with countless companies, helping them lay the groundwork for a successful move into a new market. To find out how we can do the same for you, read more about market entry in our comprehensive guide, explore our market entry services or just get in touch today.

Market size is a metric that gets discussed a lot in the business world, but what is market size, and what does it actually mean?

There are many misconceptions about the real meaning of the term, which can result in people making the wrong decisions or failing to make the most of their strategy.

If you can accurately determine your market size, this gives you a significant advantage from day one. It allows you to secure better investments, make clear-headed plans, and avoid getting sucked into a strategy with no future.

In this article, we’ll break down the basics of market size and show you how to determine yours and differentiate it from other concepts.

What is market size?

Market size refers to the total number of potential buyers for your product. Alexa defines market size as “the number of individuals in a certain market segment who are potential buyers.”

More technically, it’s the total number of potential customers or sales in a given period (usually a year) or the total potential revenues you can reach in that time.

Why is market size important?

There are many reasons why you should be interested in your market size and how to determine it accurately. Here are some of the main reasons:

Gaining investment.

Market size indicates the potential for any new business, product, or service. If you can show that you have a good chance of making money — and how much — it’ll be much easier to secure investment.

Develop a solid marketing and business strategy.

Knowing who your market is, how big they are, and how much money they represent gives you a strong foundation for building a strategy and setting clear future goals.

Determine budget and hiring plans.

Knowing your potential trajectory for growth helps you budget more accurately and hire the right team for the task ahead.

Budget better.

Use your R&D budget wisely by better understanding who your customers are, what they want, and how you can deliver it.

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How to determine market size

How do you actually figure out your market size? There are several ways to go about this:

Identify the target market for your product or service.
Carry out market research to assess the level of interest in what you’re offering — will people buy it?
Gather data on the number of potential customers and transactions per year. There are many secondary resources you can consult to help you do this.
Assess the total revenue generated in that segment of the economy in a given year.

Is your market size too small?

So — you’ve calculated your market size, but what does that number mean? How do you know if your business is worth pursuing?

The answer depends on the market and the size of your business, but there are some good general guidelines. Usually, $100 million is on the lower end, and if your market size is smaller than this, it may prove difficult to convince stakeholders or investors to get on board.

What is the serviceable obtainable market?

Determining your total market size is only the beginning, and this information alone is only worth a little.

You’ll only be able to reach some potential customers. No business has the marketing tools, scale, and budget to capture the attention of every person in their market. And that’s without even mentioning competitors. You’ll never corner an entire market, and the most you can hope for is usually a small slice. According to Tx Zhuo of Karlin Ventures, “If it’s 1 to 5 percent of the pie, you have a realistic plan.”

This is where we can turn to a useful metric called serviceable obtainable market (SOM). SOM refers to the potential customers (and potential revenue) you can realistically hope to reach with your marketing tools and budget.

So how can you calculate your SOM?

How to calculate the serviceable obtainable market

There are several ways to calculate your SOM. According to Jared Sleeper, an investor in early-stage companies, you can take three main approaches.

#1. Top-down. This approach relies on analysts’ predictions, forecasts, and assumptions about your market. It’s often based on conjecture and estimates to some extent. Consider statements like: “The wireless headset market is forecast to reach $2.5 billion by 2023”. It’s suitable for a general overview of the situation, but it’s a little vague and can be challenging to understand what proportion of the market you can realistically corner.

#2. Bottom-up. This involves starting with your price and how many units you can realistically expect to sell.

How many customers can you reach + how much is each sale = your SOM.

It’s more tailored to your specific situation instead of a broad assessment of the whole market, so it’s a more reliable way to work out your SOM.

#3. Value theory. This final strategy is less precise, but it still has some usefulness. It involves considering the value your product or service adds compared to alternatives and estimating how much customers would be prepared to pay for that extra value.

Sleeper recommends options 2 and 3 since they consider the specifics of your business and how you would interact with the market, as opposed to a general prediction.

It may make sense to use a blend of all three approaches to gain the fullest picture of your SOM and provide as much insight as possible to your stakeholders or investors.

Calculating market size is an important step on the road to building a successful business or launching a new product or service. However, it’s only one step. The metric on its own isn’t worth a whole lot unless you can also show how much of that market you can reach and compete for.

Market research is a crucial part of determining your market size, SOM, and laying the foundations for a successful business. To find out how Kadence can help you with this, take a look at our market sizing services or get in touch with us today.

Many global economies are defined by stagnant growth, falling populations and saturated markets, making growth for brands a tricky proposition. In many ‘emerging markets’ there are still big opportunities grow… if you keep your eyes open.

Many businesses are looking to fast-growth, high-energy markets outside the so-called ‘developed’ economies to fuel their expansion. Unlike congested and sometimes shrinking economies in ‘the west’, many parts of the world are seeing rapid population growth, fast-rising incomes and are adopting transformative technologies without the burden of legacy investments. The result? Vibrant new opportunities for businesses.

But while entering any new market is a challenge for brands, moving into these more dynamic economies – often with very different cultures, business practices and consumer expectations – can be particularly tricky. Berlin isn’t the same as Birmingham, but many of the norms in both markets are recognisably similar. Head to Beijing or Bamako, and the assumptions you make about brand, product and business practices will be challenged.

Take a phased approach to understanding the opportunity afforded by new markets

The best way to understand your opportunity in different markets is to take the traditional phased approach to research. This involves the following considerations.

Which markets might we look at? Consider the number of consumers, the country’s income levels and the stability of its economic and political structures. You can also examine the maturity of business practices and think about geographic location, transport links and accessibility in-market.
What’s the macro environment like in a market we want to enter? Revisit all the above, in more detail. Focus on specifics – such as the transport and tech infrastructure; and business support networks (such as accounting firms or legal protections on IP) – and how the trends are evolving in those areas.
How does the competitive landscape affect its attractiveness? Pay attention to other outsider brands and how they’re doing; but also domestic rivals and potential competitors poised to move into adjacent markets.
What are the practical issues for market entry? In new markets further afield, transport links, language barriers, different cultural norms and local regulations can throw up roadblocks.
How do we adjust our product, service or messaging to optimise our offer there? As above, but remember that very different cultures and climates can challenge even the most basic assumptions about how a product will perform.

Step away from the generalisations

It’s vital to acknowledge that ‘emerging markets’ aren’t as uniform as the term suggests. Far from it. There are so many variations by region or category that talking about common features of ‘emerging markets’ is a dangerous over-simplification. And there are as many differences within countries as between them. This particularly true in countries where rapid urbanisation has seen a break with traditional cultures outside cities.

(That’s true for any generalisation, of course. Alcohol brands, for example, can’t even treat the US and Canada the same. North of the border, there are drinking-age laws set province-by-province, massively complicating online alcohol sales. They might look the same in terms of development and even geography and demographics. But they’re not.)

That’s not to say there are no rules that apply to entering markets that share particular attributes. The pace of economic or population growth, or the expansion of middle-class consumers with disposable income, might always be a feature of your selection process for target markets.

But in many categories, consumption is growing so quickly that only the real beneficiary of a ‘toe in the water’ market entry is likely to be knock-off brands and domestic substitutes able to adjust output more responsively to local conditions, especially where legal protections for intellectual property are less secure for global players.

All these caveats mean that in-depth research into new-market consumer appetites, infrastructure and competition is just as important in growth areas as it is in more mature markets.

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Assessing new markets – 5 key considerations

All that being said, knowing the likely biggest points of difference when entering markets with strikingly different fundamentals is still important. Five things to consider:

1. Affordability

In many emerging markets, disposable income may be much lower for large parts of the population. For global products, that means understanding the more affluent segments better and targeting marketing appropriately. For localised or commodity products, the question is cost. Can you use local manufacturing, logistics and even branding to deliver your product to a mass market?

2. Distribution

Getting product to consumers might be more challenging. For brands that rely on developed economy logistics partners, understanding infrastructure constraints, developing local contacts and ensuring quality of service is crucial. When Haagen-Dazs first entered China, it set up its own warehouse and delivery network to ensure the product reached consumers correctly.

3. Localised branding and marketing

What works well in Boston, may not succeed in Beijing. Cultural understanding is key to ensuring that your marketing and branding hit the spot further afield. Caveat: remember the urban/rural split. Many urban consumers are ‘world citizens’ and expect to be treated as such.

4. Watch for local rivals

The cachet of being a global brand can help enter emerging markets. But cost, customisation and the risk of ‘brand colonialism’ can make more assumptive Western brands seem out of touch and vulnerable to local alternatives.

5. Native teams

As a global market research agency, we benefit from having local teams in the markets we evaluate for clients. This means we understand the cultural context, consumer trends and broader macro situation. It is possible to enter emerging markets at arms’ length. But having local people in decision-making positions is the surest way to avoid clumsy cultural or operational missteps.

Look for leapfrog opportunities

There are plenty of upsides to emerging markets, too, beyond simply vast numbers of new customers. In some cases, our research will throw up opportunities that just aren’t available in mature markets at all.

Look at the way different platforms have developed to cater to the nuances of local markets, for example. In many fast-developing economies, traditional channels have been leap-frogged by the adoption of newer technologies. This often happens where older tech infrastructure has attained much less penetration, allowing a newer tech to fill a void.

In many African countries, for example, low population density and long distances between conurbations means traditional copper or fibre telecoms can be limited. But mobile telecoms are more practical and affordable. They offer a plethora of additional over-the-top services that have led to an e-finance and e-commerce boom. Entering those markets will require different thinking about distribution – as well as marketing and payments using creative local solutions.

Remember, e-commerce is not the same everywhere

The Philippines is another good example. In other countries, Facebook might be just part of your online marketing toolbox. But there, Facebook has attained an absolutely dominant position in e-commerce – for one simple reason. With lower average incomes, Facebook and local mobile companies realised their penetration was constrained by the cost of network data. So almost every plan has free Facebook data regardless of contract status. For market entry success in the Philippines, Facebook is going to play a big role.

But we need to distinguish between being available on those platforms on the one hand; and entering a market on the other – which involves boots on the ground. Yes, that’s more investment. But you’re also surrendering less of your margin to platform owners and logistics providers.

A staged approach to entering less well-understood markets, starting with the more popular local social networks or e-commerce platforms, allows you to refine the consumer profile. Companies also get time to get to grips with the legal and financial frameworks that might shape future involvement; and see how local fulfilment clarifies their operational options.

Don’t assume that tried and tested e-commerce strategies from the US and Europe will work everywhere in the world, however. Amazon, for example, simply doesn’t have a presence in some markets. In others, consumers can use the site, but limitations on distribution and other logistics mean delivery times, cost and availability are prohibitive. Local research about the best platforms for reach and fulfilment is a must.

Lazada, Shopee, Zalora and Carousel, are some of the top e-commerce sites in South East Asia. These names may not be familiar to firms outside the region. But they can play a crucial role for testing in these markets. Again, it’s worth working with people who understand how to optimise those platforms, as well as interpret the effectiveness of marketing on them; and what the results say about the potential for deeper market entry.

Understand the technicalities of new markets

Even online entry into a very unfamiliar market can be daunting. Moving in for formal distribution, licensing or agent agreements or even setting up locally or buying into a native business brings with it additional issues that need to be researched.

European companies with experience of entering new markets in the EU can find the regulatory and legal considerations in countries farther afield a challenge. Even in the US there are federal laws and individual state regulations over companies and property to contend with. This can make establishing a new business relatively tough. And that’s considered a ‘developed’ market.

In parts of South East Asia, many European companies report lengthy delays in registering businesses. Others discover that in some markets domestic firms have particular benefits. This could be a form of protected status, or reserved access to certain kinds of contract. This is worth exploring in due diligence especially if you plan to sell to government agencies that are often required to ‘buy local’.

Don’t make any assumptions

Most of the key factors for market entry will depend on exactly which market you’re looking to enter. There are very few hard and fast rules that apply across the generalisation ‘emerging markets’.

But there is a common theme from this guide that should frame your thinking: these markets change – fast. Before committing to entering any market – and especially ones evolving so rapidly – it really pays to research the opportunity fully. This is something that Kadence has helped many clients with, allowing companies to succeed in lucrative emerging markets. Find out more about our market entry services, or get in touch to discuss a project.