Singapore has reigned supreme as a lucrative market for domestic and international businesses, and according to many economists, it is the best country to do business. 

So, what makes Singapore a favourable market for international companies?

Singapore’s location makes it an ideal place for foreign investments. The world’s busiest port and a pro-business environment position Singapore as an attractive market for foreign companies to expand into the Asia Pacific. 

#1. Singapore presents an excellent balance of East and West. 

Given Singapore’s colonial past and diverse population, there is much familiarity with many Asian, European, and American cultures. As a former British colony, Singapore’s legal, administrative, and taxation models are similar to those in the UK and the US.  

“Singapore builds itself on this position of being kind of like a trading post,” said Philip Steggals, Managing Director at Kadence International Singapore. 

Furthermore, English is widely spoken, and adopting a Western lifestyle has made Singapore an ideal international market. At the same time, Singaporeans are proud of their heritage, so it’s an excellent market for other Asian countries to enter. Therefore, Singapore is an ideal mix of the east and west and embraces everyone. 

#2. Singapore’s economy is very business-friendly. 

Geographically, the island of Singapore is small and lacks natural resources. Therefore, the economy relies on international operations. It has also focused on building a large manufacturing industry, making it a significant export market for the US. 

“The Government very much has that mantra of helping people either come into the country or helping people in the country expand regionally to grow their business and improve everybody’s lives,” Philip said. 

The government has also implemented economic policies to promote international trade and has a friendly business model. Foreign businesses are subject to the same laws as local businesses. 

Businesses can also use agencies to get the help they need to secure capital and set up their Singapore entities. 

“IE Singapore or Enterprise Singapore sits under the administrative trade, and it facilitates overseas growth of Singapore-based companies, regardless of nationality,” Philip said. 

There’s another entity called Spring, which plays a similar role in growing enterprises. 

“Spring is the place to go where you get quite a lot of government grants as well — the sort of tech investments and grants, which any small-to-medium-sized company can benefit from,” he added. “Then there is the Economic Development Board that also helps businesses. So the message is that if you are in Singapore and you want to grow, then we will help facilitate that process.”

If you have a good product or service, you could quickly expand it in Singapore. And if you’ve got a product or service that you’ve replicated quite well, Singapore is a great, safe, predictable market to grow it. 

The legal help you get in Singapore is very transparent and secure. With sound finance systems, it is easy to get loans. If you are an SME, you can walk into one of the local banks and set yourself up with all the business accounts you need, likely on the same day. Many banks accept digital signatures and allow opening bank accounts online. 

 “You can also easily find advisors who will help you grow into other markets or advise you on how to grow your business in Singapore,” Philip added. 

There is a massive opportunity for external investment, and international businesses own their companies 100% when they expand to Singapore. 

Geographically, being a small market, it’s easy to meet people, even in times of a pandemic, because everyone lives in a small area. “You can network quite easily, and you can find somebody that will have the right skillsets or advice for what you need,” Philip said. 

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#3. Singapore also offers attractive tax laws to international companies entering the City, State. 

The government offers attractive tax incentives to businesses in Singapore. 

#4. Access to ASEAN.

Despite the small market, Singapore is well-known globally for its IP strengths and easy access to the broader ASEAN region. 

Top industries in Singapore

Tech, fintech and cryptocurrency, cyber security, and mobile payments are some of the fastest-growing industries in Singapore. FMCGs and food franchises from well-established brands overseas do very well. 

“Singapore is a centre for tech and innovation excellence. We have a lot of people that would typically be involved with big multinational companies setting up innovation hubs here or bringing their regional headquarters into Singapore,” Philip said. 

Main challenges of doing business in Singapore

More than 99% of all imports enter Singapore duty-free as a free port. It levies high excise taxes on distilled spirits and wine, tobacco products, motor vehicles, and gasoline.

Other industries that pose challenges for international companies include livestock, and services barriers that restrict satellite dishes, pay television, legal services, banking, and healthcare procedural transparency.

Philip listed three main obstacles for companies trying to build a subsidiary in Singapore.

“While it’s fairly easy to set up a business in Singapore, it’s a challenge to bring in mid-to-low-level employees, which then gives you two options. You either have to come in with some top trainers, or you have to come in and know that much of the work will be done by people that aren’t necessarily familiar with the business,” he said. 

“If you want to set up a business, you should be able to show that you are going to employ locals and, you’re going to train them so that they can eventually take over running operations and have more senior roles.”

“The job creation equation is what Singapore is looking for when you set up a business, so you should have a plan on employing Singaporeans,” he added. 

There is also fierce competition with other countries trying to enter Singapore, so international companies should be aware of this. 

Impact of covid 19 restrictions

Singapore has had some of the most stringent lock-downs during the pandemic. 

As a result, some businesses have shut down during the pandemic, and others have accelerated in Singapore, despite strict COVID-19 restrictions.  

“I think the pandemic has just accentuated what was going on beforehand,” Philip said. “However, one of the issues has been a shortage of labour force coming in from other countries. Many expats have also left the country due to stringent COVID-19 restrictions.”

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What do Singaporean consumers want?

Price, quality, and service are essential factors for consumers in Singapore. International companies entering Singapore must know that the buyers are discerning and that the competition in the market is intense. Singaporean consumers also like products and services that are well established in their home countries and have a story or history behind them. 

So from a consumer standpoint, what are the key considerations Singaporean consumers have? 

According to Philip, that depends on the category. 

“We did some research on the luxury purchases made in Singapore and Asia. Consumers want to see some heritage and a well-defined story of where the brand is from and why it exists when it comes to the high-end market,” he said. 

“The German manufacturers do very well in the automotive market, and there’s a sense of prestige associated with the well-known European luxury car manufacturers. There’s also a significant segment of people that are very practical and go for Hondas and Toyotas.”

Food and beverage outlets do very well if they are well-established in their home market. Brands with their roots in China or Taiwan for some novelty-type items and popular brands in Japan also do very well, as do Korean skincare brands. 

In a nutshell, Singaporean consumers like understanding the brand’s roots, why it’s now Singapore, and what it’s doing. They are a discerning populous and are looking for quality products and services. 

Selling and distributing products and services in the Singaporean market.

Selling techniques utilized in Singapore vary by product and are similar to sales practices in sophisticated western markets. Social media and online marketing are growing in Singapore, and it is essential for international companies that use agents in Singapore to visit them regularly. 

“A lot of our clients at Kadence have their regional offices in Singapore because of a very transparent legal system. The government is also very predictable and pro-business, so if you’re going to set up a regional base, Singapore is the perfect place for it,” Philip added. 

A favorable time zone gives it another advantage and makes it suitable for business. The commerce or the distribution networks from Singapore to the Southeast Asia and North Asia markets is pretty straightforward.

“Moreover, the ease of commuting makes Singapore the perfect base for operations. It’s also typically relatively easy to get visas for higher-paid staff members here, and it’s not considered a hardship posting to be based in Singapore, regardless of your home country,” Philip said. 

How to strategize market entry into Singapore

If you have a successful product or service in your home country, expanding into Singapore is a good idea. One cannot emphasize the importance of a concrete market strategy and solid business plan for market entry into Singapore. 

Over 4,500 US firms have launched business enterprises in Singapore. Many international exporters use agents and distributors to enter Singapore. These agents and firms aggressively represent new products and services in Singapore. Therefore, it is invaluable to find suitable partners and utilize agents.

The top three strategies that subsidiaries can utilize when planning entry into Singapore are:

1. Identify your growth plan. Singapore as a market is not very large unless you are a McDonald’s type company. But for most industries, your potential is relatively small. The population is 5.7 million, so you must identify where else you can go. It would help to calculate your maximum potential returns based on your target audience. For companies entering Singapore, knowing that growth plan would be substantial.

2. You need to have a sound training system. As a small company with one or two people set up like a distribution hub, you will probably be fine, but as soon as you start growing, you will be expected to recruit more Singaporeans. Therefore, you will need to have training in place. 

3. Do your commercial research. The government is pro-business, so you must research who to ask for help and what benefits you can receive. 

Political and economic stability in Singapore

Singapore has had the same government since its foundation. 

One of the reasons behind Singapore’s massive growth over the past five decades is the consistency of government. “You can put long-term visions in place without your political parties, flipping it as a political winning system to get elected,” Philip said. 

Singapore has shown phenomenal growth in the last ten years and will continue to grow as it is a great place to live, and do business and is devoid of red tape or bureaucracy. 

The next 50 years will present new challenges to Singapore in the form of an ageing workforce, a maturing economy, social media’s growing influence, and increasing competition from other trade agreements and ASEAN partners. However, it remains an attractive market to enter and shows phenomenal potential in years to come.

We would welcome the chance to discuss your next market research project. Learn more about our Singapore Office here.

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Why consider developing a market entry strategy for India?

It’s very simple: India is a huge market. In population terms, it’s now on a par with China at around 1.3 billion people – and it’s likely to overtake its northern neighbour this decade. India is still a young country – 44% of its population is under 25 years old – and is seeing rapid growth in both its wealth and economic make-up, quickly becoming a global hub for technology and manufacturing.

It’s also seen massive urbanisation over the past 50 years, with six megacities in excess of 10 million inhabitants: New Delhi (31.2m), Mumbai (21m), Kolkata (15m), Bangalore (12.8m), Chennai (11.2m) and Hyderabad (10.3m). Like China, the latter years of the 20th century saw a rapid expansion in the middle class as the impact of globalisation opened international opportunities. The number of households with a disposable income of more than $10,000 a year leapt from around 2.5 million in 1990 to nearly 50 million in 2015.

India’s links with the rest of the world have not always been easy. Their historic relationship with the UK, for example, created lasting cultural ties, but is scarred by colonialism, too. Although India’s recent history as a global powerhouse has been tense at times, businesses from all over the world – and especially anglophone nations and Asian neighbours – are now deeply enmeshed in its economy.

Brands interested in getting into the Indian market will find a strong legal system, democratic structures, a broadly market economy (although with caveats – more on that below) and an entrepreneurial and aspirational customer base with wide interests and diverse patterns of consumption.

One problem for overseas brands coming into the Indian market is that many decision-makers outside the country retain a very mythologised view of India. It’s still perceived by some, for example, as defined by widespread poverty and fixed traditions. While there is poverty – as there is in every country – a rapidly growing middle class and highly advanced tech infrastructure tell a far more nuanced story.

Nevertheless, brands entering India must be ready for a land of diversity and contradictions. This is a nation with a successful space programme; but faces complex challenges resulting from inequalities. It has a thriving cultural industry, and produces (and exports) some of the world’s best medical professionals; yet is in the third quartile for life expectancy.

So it’s no surprise that businesses both large and small rely on local expertise to ensure they can navigate the highly diverse and nuanced byways, trends, localities, attitudes and expectations that make up ‘India’. And it’s a reminder that proper research of this market – or, perhaps, these markets – is an essential stage for successful market entry.

Understanding the challenges – the barriers to market entry in India

Before brands even get to researching the nuances of the different markets in India – and which of them might turn out to be fertile ground in terms of consumer or B2B attitudes and behaviours – they need to some investigate the practical issues confronting companies entering the market.

At the highest level, Prime Minister Narendra Modi has looked to extend the ‘Atmanirbhar Bharat’, ‘make in India’ or ‘self-reliant India’, policy to accelerate the country’s economic development. This is built on five pillars, which offer some guidance for brands looking to enter India on the country’s political and economic priorities:

  1. Economy – designed to deliver significant growth, not incremental gains.
  2. World-class infrastructure – to facilitate additional growth.
  3. Technology focus – where India’s vibrant tech sector offers strong foundations.
  4. Vibrant demography – harnessing the energy of diversity for self-reliance.
  5. Demand – a huge and growing population can massively fuel domestic economic growth with the right supply chain capabilities in place.

It also means restricting imports of many goods that might be manufactured in-country. Modi talks about creating a ‘new paradigm’ for job-creation and entrepreneurialism. “The mindset of free India should be ‘vocal for local’,” he said in August 2020. “We should appreciate our local products, if we don’t do this then our products will not get the opportunity to do better and will not get encouraged.”

In practical terms, that’s meant high-profile bans being phased in on imported armaments, for example (although not to universal acclaim). During 2020, the country’s three Covid stimulus programmes were labelled ‘Atmanirbhar Bharat’ packages; the development of Covid vaccines was cited by the Prime Minister as a success for the project; and India is planning a domestically equipped and run 5G network. There’s also been a push on loyalty to local brands in many consumer categories – right down to cooking oils.

Looking more broadly, India ranked 63rd in the World Bank’s latest Ease of Doing Business rankings, scoring well for investor protections, getting credit and access to utilities; but very poorly on enforcement of contracts, registering property and starting a business.

The rules for trade are also complex. Even after the departure of Donald Trump and his hostile trade policies, India maintains considerable tariff and non-tariff barriers to US trade. And only China has more entries than India in the UK government’s lists of trade barriers for businesses looking to operate abroad. True, some are minor – such as adding labels to food and drink products; others are in very niche sectors, such as the export of luxury yachts.

But non-Indian professional services firms – legal, accounting, architectural – face considerable barriers to entry. And finished cars (including second-hand vehicles) face a basic customs duty of 125% – which can be augmented with additional levies taking total duty in India as high as 260%. There are even moves to adjust duties on car components and kits to deepen the Indian manufacturing base beyond in-country vehicle assembly.

Both national and state-level controls and tariffs need to be evaluated, and it will pay dividends to take advice on specific sectors, categories and regional variations from both home-country trade advisory teams and local Indian experts on the ground. India is not, therefore, a place to skimp on market research.

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Opportunities still abound

But don’t think this means the door is slammed shut. “It’s not going back to socialist India – we want imports to come in,” said Finance Minister Nirmala Sitharaman, speaking at The Economic Times Awards for Corporate Excellence in 2021. She says the government has been selective in choosing sectors to face rising tariffs. And the policy is far from universal (or universally popular), despite the nationalist rhetoric. So change is not inconceivable.

Trade does remain vigorous. India was the 12th largest export destination for US goods in 2018 (worth $59bn, including services), and the EU exports around €33bn worth of goods and services to the subcontinent each year. And EU-India free trade talks restarted in 2021 after an eight-year hiatus. One recent blip has been Chinese exports to India, which fell 11% in 2020 – albeit to a still massive to $66.7bn. (Note that China remains a major geopolitical rival to India, which shapes attitudes to the trading relationship.)

The recent Britain Meets India report, prepared by Grant Thornton, highlights the scale of inward investment into India (between 2000 and 2020 an estimated $29.5bn of UK capital was invested in India – and that’s just 6% of global investment flows into the country). Trade between the two countries was worth $26.7bn in 2020 alone – even with the effects of the Covid pandemic – with UK exports amounting to around £8bn.

The presence of major global companies such as Apple – especially as an investor in local manufacturing capacity – shows there’s deep interest in working alongside both state agencies and domestic business partners to ensure access to this massive market despite import controls.

Netflix is another example. Despite some initial challenges regarding insufficient Indian content and the possibility of fresh regulation, it’s slated to release 40 local productions to steal a march on streaming rivals, building on its existing five million subscribers. (Although Amazon Prime’s own $2bn investment in India is making Netflix’s progress more challenging.)
So it’s no surprise that many countries are eyeing up India as a potential trade partner. In post-Brexit Britain, Prime Minister Boris Johnson wants to “more than double trade with India to £50bn by 2030”, according to texts of a (Covid-suspended) trade speech the he planned to give in India.

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Developing a market entry strategy for India: should you go deep or wide?

Standing up the commercial rationale and the practical issues around doing business in the country is a vital first step for brands wanting to enter the Indian market. But the top-level data – the rules and economics– is only half the story. Scale, diversity and local nuance are also important factors, and these demand more careful evaluation.

At the outset of any market entry project, organisations will need to make a series of choices that demand much deeper research into their specific sector, the markets they want to address, and the different audiences they will encounter. In other words, what’s your aim, where will you focus your efforts, what products and services might succeed – and how might you translate this into a sustainable market position?

In a market as diverse as India, that idea of ‘focus’ is central to a successful project. Geographically and culturally vast, the attitude to many of life’s fundamentals differ widely between regions. Of course, there’s language to consider (more on this below). But behaviours and preferences also differ across geographical areas. For instance, in the eastern and southern regions, rice is the staple carbohydrate and hardly anyone uses fresh milk; in the north and west, people eat breads and powdered milk is frowned upon.

That’s just a couple of examples of the kind of consumption gulf that can exist – before we even get to the differences between urban and rural consumers, or cater to varied cultural touchstones.

A misstep many brands make when considering market entry is thinking about how to capture the Indian market as a whole, then. It can be much more valuable to consider which slices of the pie you might be able to go after – the better to tailor your proposition, branding, logistics and competitive position.

Market research in the field: be clear on your objectives when it comes to market entry in India

This idea of ‘focus’ is particularly important when it comes to the market research methodologies you’ll need to inform your market entry strategy.

Imagine a global brand looking to understand its status or opportunities in lots of different markets. It decides to survey 200 consumers in a couple of dozen countries. In Germany – no slouch with over 80 million people, and some marked regional variations of its own – such a study might yield usable national results. But in India, just the top six megacities – each with a very particular identity – comprise over 100 million consumers. Those 200 interviews are only going to scratch the surface of the big cities, let alone the emerging conurbations and rural population.

There are two possible solutions. First, massively increase the sample for India to reflect its scale. Or second, as we mentioned earlier, focus in on higher-probability markets assessed in partnership with local research teams. It’s not simply an either/or choice, of course. But it highlights the need to make some very clear and well-informed decisions right at the outset of any market entry project.

Find the right partner: local research for local people

Because of the diverse nature of India, the key to a great research partner in India is coverage. That starts with teams based in the country whose ability to advise on high probability areas for focus will be much more acute than agencies based outside India.

Then it’s a question of being able to conduct research effectively to flesh out the objectives of that initial focus. The project leadership will need to understand the different regions – and in many cases, have a clear idea about the unique profile of the 28 states and eight union territories that make up administrative India (with all the conditions they impose).

With 415 living languages (22 of them ‘officially recognised’ for the purposes of administration) and countless local cultural nuances, research teams with local sensitivities are understandably valuable. (We joke that every 5km in India the language changes – but watch out, because every 2km there’s a new dialect…) Our teams speak a broad range of languages enabling us to conduct market research across the length and breadth of India.

Harness technology – India’s secret sauce

India is a global leader in technology, boasting one of the largest and best-trained IT workforces in the world. This is no flash in the pan: Indians, particularly in the middle classes, but increasingly across society, are heavy users of connected technologies and mobile devices. It’s a world leader in low-cost data plans, too, and smartphone adoption is widespread enough, even in many rural areas, to allow for the new generation of online research methodologies to make their mark, alongside more traditional face-to-face approaches.

When it comes to online research, to reach the urban middle classes, laptop-based methodologies should work well. It’s worth bearing in mind that good bandwidth can be spotty – which means limiting the use of video-intensive approaches – but surveys and even text-based communities can work really well. And with the level of smartphone penetration even outside the cities, there is even an opportunity to exploit app-based research or community platforms to build long-term engagement and insight.

Watch, too, for the roll out of India’s own 5G network. Like any country – especially one as vast as India – coverage will be limited at first. But as penetration grows, it should offer new opportunities for richer research projects.

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Notable openings – target sectors for a market entry strategy for India

We’ve already noted that global brands in new categories are making a play for Indian consumers – such as Netflix and Amazon Prime in the streaming video space. So where else might brands research a successful move?

Premium brands

While ‘made in India’ is politically potent, for less price-sensitive consumers there remains an affection for overseas brands – particularly those with a reputation for quality and durability. Indian firms are catching up fast (its domestic chocolate brands see huge growth in premium products, for example), but the opportunity persists for now. As BCG noted in 2017, “Consumers in emerging cities… have high purchasing aspirations but are often constrained by product availability.”

Auto brands

While domestic makers Tata and Maruti Suzuki dominate (the former state car-maker now owned by the Japanese motor giant has about half of the market), tech and usage transitions create openings for overseas brands if they partner with local industry. India’s passenger vehicle market is something of a roller-coaster: a period of strong growth was halted in 2019 – unit sales fell 12.75% to 3 million – then further slowed by the pandemic. But the long-run pressure on enhanced mobility should present opportunities.

Fast moving consumer goods

Although this has been a target of the ‘vocal for local’ campaign, there are brands such as Unilever that have retained a dominant position in many categories. That suggests there is an option to leverage strong brand image to gain a firm foothold. In areas such as confectionary, for example, French/Belgian group Barry Callebaut sees huge growth opportunities. Kellogg’s initially struggled in India – it was overconfident with existing product and marketing formulas – but has carefully tailored its approach to succeed.

Youth brands

In more traditional rural areas, the division between young and old is less marked. But in bigger towns, fast reliable internet access and varied career opportunities mean young Indians are developing a more global outlook and in many cases, that creates fertile ground for international and ‘cool’ brands. With a median age of just 28 (across Asia as a whole it’s 32) and the ‘millennials’ ascent into higher income brackets, catering to youth in India has huge upside.

Top tips for success

It’s impossible in a market this large and diverse to offer up general principles that will hold true everywhere. But some of the research basics will serve brands well in India – and there are some tips for making market entry a success.

Let experts find you a product/market fit.

Desk research can take you so far, but local expertise will make the process of investigating high-probability markets much quicker and more effective. Kadence’s India team know where to find the populations that dovetail with your product values and attributes.

Adapt brand, marketing and packaging.

Try to get ahead of cultural biases with your presentation – from packaging (where hygiene and transport conditions are a factor for many Indian consumers, incidentally) to the language used. Guidance on these issues should drop out of your initial product/market fit conversations.

Target your fieldwork carefully.

If you’ve been clear on the product or service qualities and work with local experts who can identify more fertile ground, this ought to be easy. Fieldwork costs can mount up in India – and poorly targeted surveys are both money and time wasted so think carefully about the people you want to reach and how best to achieve this

Stay relevant.

India is a fast-evolving nation and its consumers’ tastes are changing too. Customers will reward brands that stay in touch with them – either through programmes such as loyalty schemes or through longitudinal research projects. These same methods are ideal for spotting emerging local and international rivals, as well as shifting attitudes towards overseas brands.

Above all, respect the fact that India is a single nation in many respects, by a diverse collection of people in others. With 1.3 billion people to satisfy, even the kind of precise targeting we recommend for overseas brands can open up vast potential markets. India is not for the faint-hearted. But the upside is enormous.

Developing a market entry strategy for India?

To find out more about how we can support your organisation to break into a new market, learn more about our market entry services or get in touch to discuss a potential project. Alternatively, you can consult our market entry resources – from our ultimate guide to market entry to our tips for breaking into China.

Launching a new fast-moving-consumer-goods (FMCG) product is a process wrought with challenges and notoriously difficult to pull off successfully. In fact, it’s such a treacherous domain that approximately 80-85% of all FMCG launches fail! So how do you successfully launch a new FMCG product in the market?

Companies need to do all they can to maximize their chances of success when it comes to launching their product. This means getting all the different stages of the process right, investing the right amount of time and resources into planning, and making use of all the tools and knowledge at their disposal.

In this article, we’ll show you how to launch a new FMCG product in the market successfully. To do this right, you need to start at the very beginning by considering what makes any FMCG product successful.

What makes an FMCG product successful?

There are a number of factors that successful FMCG products have in common. Let’s take a look at 3 things that separate good products from failures.

They’re distinct

Successful FMCG products have to offer something that sets them apart from all the other similar products on the shelves. However, this can be a tricky balancing act — you don’t want your product to be so different that it moves away from what the customer wants. 

If, for example, you’re selling a brand of instant coffee, you know your customers want some variety of coffee that they can pour into a mug and get a fresh beverage in seconds. But at the same time, you want your product to stand out and offer something more than all the other instant coffee brands. 

Brands that can strike this balance right and create a distinctive FMCG product that continues to delight the customer will be on the road to success.

They’re what people want right now

The FMCG space is defined by being in a constant state of change and flux. Innovation is happening all the time, and people’s tastes are constantly changing.

Successful FMCG products are able to tap into trends and popular demand, giving customers what they want right now as opposed to what they wanted five years ago. For example, as people become more health-conscious their taste in snacks has changed. The companies who picked up on this change in demands and adapted their product offering to include healthy, low-calorie, high-protein snacks were the ones most able to adapt and succeed in a changing market.

They persist

In a market where goods go in and out of fashion quickly, brands that can stand the test of time are at a huge advantage. Household names like Coca-Cola, L’Oréal, and Nestle are household names because they’re masters at staying relevant and in-demand in markets that are prone to constant change.

Doing this successfully requires an intimate knowledge of your market and customers and a knack for constantly delivering even as tastes and trends evolve.

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Why do FMCG product launches fail so often?

There are lots of reasons why launching an FMCG product is so hard and why so many fail. Here are some of the main reasons FMCG launches tend to come up short.

It’s a competitive space

There’s no getting around it — there are lots of FMCG products out there. When you enter this market, you’ll be competing with many other brands, brands that have often been in the game for many years.

If you don’t get it right from the very beginning, you’ll never be able to effectively compete and your target customers will go straight to the brands they have been using for as long as they can remember.

Failure to use data and market research properly

Today’s businesses are blessed with more data than ever before in history. Much, much more. And this can be augmented by wider market research to understand the market, the key trends at play and reactions to your concept or product. If used correctly, this data and insight allows you to better understand your customers,  and launch a product that takes the market by storm.

Unfortunately, many FMCG brands fail to tap into that rich reservoir of data, missing out on the advantages it offers and instead launching a product that isn’t closely aligned with what customers want.

Development costs and lack of funding

Another characteristic of FMCG launches is that they’re expensive. Developing a successful FMCG product can cost a huge amount of money, and this typically requires a lot of reliable funding and investment.

If you fail to secure enough funding for your project, you’re setting up the entire launch for failure.

Failure to understand timescales and stick to them

Launching an FMCG product involves a huge number of moving parts and deadlines. If you aren’t careful, it’s easy to mess this up and end up falling behind the dates you promised.

One clear example is shipping times. If your product fails to reach your customer within the time they expect, you’re creating a recipe for canceled orders, damaged reputation, lost money, and a failed launch.

Failure to understand the importance of constant innovation

The FMCG space is defined by constant, ongoing innovation. Companies are investing vast sums of money into making sure their next product is enough to stand out from the fierce competition and keep customers delighted. To survive and succeed as an FMCG brand, you need to be constantly learning, adapting, and innovating. It never ends, and it’s the only way to avoid failure.

Consumer looking at FMCG products

How to launch a new FMCG product in the market successfully

Understand the market and your customers at the outset through market research

Understanding your customers and the market is absolutely critical when thinking about how to launch a new FMCG product in the market. You need to know as much as possible about your customers’ pain points, desires, their demographics, what they’re already buying, and more. 

Understanding the broader market you’re operating in is important too. This can help you identify trends to capitalize on and size the opportunity for your FMCG launch. 

This research should take place long before the product launch, in the initial stages of planning to help inform the ideation process.

Testing, testing 

Research is also important later in the process when it comes to testing your ideas with consumers. Quantitative concept testing can help you whittle down your ideas and select the ones with the best chance of success to take forwards. Qualitative concept testing can help you to further refine those ideas in line with consumer wants and needs. There are also other elements of research to consider further down the line once you reach the prototype stage, such as pack testing, central location testing or test tastes to optimise your product ahead of launch. 

You can read more about what research you need to consider at each stage of the new product development process in our guide. 

Get your marketing right

Effective marketing is a crucial element of every FMCG product launch. Use insights from the NPD process to guide your messaging – on the pack, at the point of sale and in your marketing and comms – to cut through with consumers and steal share of market.

Always be learning 

Testing should be an ongoing process — make sure you continue to test, measure and learn, even after the product launch. Collecting data, and making tweaks in response to the feedback you receive can help inform product relaunches or line extensions to keep you at the forefront of your category. 

Launching an FMCG product is no mean feat. It’s famously hard to pull off, and statistically most brands who attempt it fail. But that doesn’t mean it’s impossible, and with the right approach and expertise, you can significantly improve your chances of success.

To find out how Kadence can help you boost your chances of success with an FMCG product launch, get in touch.

Entering the Chinese market is a strategic priority for many brands. But like any market entry project, whilst the rewards are great, so are the risks. Success relies on conducting nuanced research so you’re able to develop a comprehensive Chinese market entry strategy. In this article, we’ll share our top tips for getting this right based on our experience helping brands across categories break into the Chinese market. You can also conduct our ultimate guide for market entry for further information.

The pros and cons of getting into China

Potential market entry benefits and barriers in China

Benefits to exploreBarriers to consider
There’s money to be made there. It’s a huge and growing economy.China is incredibly competitive – with both domestic and foreign brands in play.
Consumer appetite is evolving all the time, creating openings for new brands, products and services.It’s dangerous to make assumptions about the state of the market – and long-term planning can be tough.
Wealth is spreading, creating evolving demand and growth in most categories.There are still huge differences between the top-tier cities and the rest; and between urban and rural markets.
Chinese consumers tend to like branded goods and seek out quality where they can.Domestic Chinese brands have upped their game into premium spaces.
“If you can make it there…” Learn the lessons from breaking into China, and you’ll have valuable insights for other international expansion.China has some unique attributes – including tough regulation of key industries and some long-standing consumer attitudes that might never shift.

All that being said, China is obviously a vast market, with 1,394,000,000 people. That means even capturing a small niche or focusing on one region or even city can result in big revenues.

China has more than 600 cities often broken down into four tiers. First-tier cities including Beijing, Shanghai, Guangzhou, Tianjin and Chongqing are usually classified as having a GDP over $300bn (about the size of the entire South African economy). In these, and the tier-two cities, there is widespread demand for products and services that aren’t being catered for domestically.

And despite the fast development of homegrown brands, for many consumers, overseas brands retain an allure. So although the execution of any brand proposition needs to adjust to the needs of the market – and in a country as diverse as this, market research proves itself invaluable in this respect – a look at China must be a consideration for any growth-minded business.

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When to consider developing a China market entry strategy

We see a few different prompts for brands wanting to explore the Chinese market. One is where similar products or services are performing well there, with attributes that might be replicable. For example, we’ve seen strong demand for premium Korean cosmetics recently – it’s a sign similar propositions might fly. In niche areas such as luxury handbags and cars these is a persistent strong demand for foreign brands.

Those buying patterns are highly visible. But we can also pick up less obvious trends in consumer behaviour that give clues as to potential in China. For example, we’ve seen a growing love among the Chinese middle classes for avocados. (It’s not just 2016-vintage millennial hipsters!) That suggests possibilities for brands that take the time to probe shifting attitudes.

In the first case, then, we’re looking for product features and brand offering. In the second, we’re exploring new consumer behaviours – although in each case we need to evaluate whether this is a fundamental change in consumer mindsets, or just a fad.

Underlying all that needs to be the economic rationale for entering the Chinese market. We might be able to detect strong potential demand. But will the costs of entering and sustaining this vast market – especially given its competitive nature – make sense? Remember that China has a number of regulations on commerce and media. We’ll come back to that later, but it has a bearing on the risks, and therefore the economics, of market entry.

Don’t be arrogant – success in China isn’t guaranteed

It should be obvious by now that one of the biggest opportunities is bringing in a premium, overseas brand to woo and wow the expanding Chinese middle class. But don’t be fooled by that stereotype – and don’t assume that you can just transplant existing brand approaches and expect to deliver results.

For a start, the way you deploy advertising and tailor packaging will be crucial. Chinese consumers will often be swayed by the way brands are presented, so understanding exactly how people are responding to the brand image and packaging can’t be ignored.

Then don’t assume just because you’re a foreign brand that you’ll attain a ‘premium’ differentiation. Fifteen years ago, there was almost an automatic patina of exoticism attached to non-domestic brands; they were more likely to be seen as classy and rare, helping maintain margins. Today, local brands in many categories are considered to be delivering a premium, too. And for many consumers, reliable quality and attractive features are the acid test, not the brand image.

Categories are not universal

Market research can reveal exactly how your brand might be received, and whether or not it’s going to attract any kind of premium. It’s also extremely useful at understanding which parts of any given category represent an opportunity in China – and which might be duds.

At a recent industry conference, we heard how a extremely well-known global drinks brand approached this problem. Ideally it would have rolled out its full slate of premium-branded alcoholic beverages, creating leverage around ad spend, logistics and exploiting halo effects. But while whisky is a strong segment in China, for example, wine is a much smaller niche.

At that point, another decision comes into play: research might show you which sub-categories are worth pursuing. But you also think how to enter these sub-categories. For that luxury drinks brand, for example, do they pitch the quality of the alcohol? Is it trying to project ‘conviviality’ for consumers? Is it the product heritage – seeking that ‘foreign premium’ angle? Or is it the look and feel of the products on the shelf?

The same rule applies the other way around. Yes, there are categories that are highly unlikely to be fertile ground for overseas brands – such as food, for example. It’s intensely competitive, demands a sensitivity to local tastes … but yet there might be openings in the right niche.

Or take transport. In electric vehicles, China is some way ahead of most non-Chinese manufacturers. But outside that sub-category, partnerships with local auto-makers and dealers could yield good results. Research can help uncover where these niches might be.

Cars at night, China

Learn from others – analysing the China market entry strategy adopted by others can set you up for success

The Chinese market has been growing at pace for 40 years, so at this point there are few areas where someone else in your sector hasn’t had a go at joining the fray. Indeed, many big global businesses will have in-house experience of breaking China – and making sure the lessons from one brand, product, category or local market entry are learned for subsequent attempts is obviously crucial.

Then look at the history of the category – there will almost certainly be rival brands that have tried and failed to launch in China before you (and some that have succeeded). Analysing what they did right and wrong can reveal all kinds of lessons.

Marrying those insights with up-to-date and well-briefed market research is a recipe for success. The phasing goes something like this:

  • Work out where the existing opportunities lie – what can we see from published market data, the level of competition, and products or services doing well in similar markets (especially in South East Asia – countries such as Indonesia and the Philippines are also fast-evolving, diverse, vibrant and digital)?
  • Evaluate local competition, emerging players, and regulatory and economic risks. These will include local rules on product specifications, or potential requirements to partner locally.
  • Work out why there’s a gap – and why you’re well placed to exploit it. Landscape studies should also highlight consumer appetites that will help or hinder progress.
  • Look at who’s failed doing something similar and why; and who’s made their inroads work, and why.
  • Research the evolution of the market – things change fast. Who’s up-and-coming? What are the evolving consumer habits? How will you stay on top of changes?

“Can my brand expand in China?”

Regardless of what you want to test, brand is a key issue in Chinese markets. Food, for instance, is a crowded market, so launching a new product to stretch the brand is always tricky. Research can tell you whether halo effects will work in China – and how to exploit (and not devalue) existing brand equity.

For example, we recently worked with a confectionery company on the possible launch of a newly acquired brand in China. We ran taste tests, but also explored what the new brand might mean to Chinese consumers versus how it would be perceived under the umbrella brand of the parent company. 

China is a fairly mature market, and there were a similar products in the market. So was it worth bringing in the new brand? Should they use the parent company’s branding to muscle into the segment? A big issue was how the new product might alter the existing overarching brand story if that was the case. Should it be a standalone brand?

We focused on one tier one city to establish the opportunity. In tier three or four cities, responses might have called into question the brand strategy – but the top-tier cities where a particular strategy might work are a very sizeable market on their own. But it’s still worth developing insights to frame that brand strategy, not just tailor a product.

The product’s premium taste and lavish packaging made its core product a hit for gift-giving Chinese, even at premium prices. But this project showed there are important areas for research to test what powers a brand has in new spaces in a market as sophisticated as China.

Shopping mall in China

Research – set a baseline, monitor change

China’s rapid evolution means ‘the future’ is much nearer than many people think, however. We can assess the probable changes over the short term; the plausible over the medium term; and the possible in the long term. But when we research Chinese markets and opportunities, it’s extremely wise to keep an eye on what looks ‘long term’ because it can arrive quicker than in many other markets.

That’s one reason for entering the market with as detailed an understanding as possible is important: yes, it might change quickly – but you need a solid framework for local conditions and consumer attitudes to ensure you can monitor what’s changing, how fast and in which direction.

The good news is that Chinese consumers, very broadly, tend to be very tech-savvy. (The WeChat platform, for example, is more widespread than Facebook – with about a billion active monthly users, it’s near-universal – and has many more practical applications.) This tech-savviness is particularly useful for conducting online research, allowing for fast-turnaround methodologies and investigating consumers outside the big tier one cities. In short, it’s ideal to capture rapid changes from the baseline. And unlike some Western markets, China’s older population seems determined to be digital, narrowing the gap we see in some other countries’ research approaches.

But we would rarely suggest only conducting research online. In the huge markets of the big cities, face-to-face research is still the best way to test behavioural and experiential aspects of consumers’ lives and tailor your approach to their unique expectations and requirements.

Top tips for market research in China

  • Be open about what you want to achieve in China and be realistic about who the product or service might appeal to. China is huge and diverse, so pace yourself and target realistically.
  • Calibrate your results. It can feel daunting competing in a crowded marketplace with strong domestic rivals. But it’s a long game: what look like tiny positives from research compared to other markets can be valuable toe-holds, establishing your brand for more serious revenue growth later; or guiding your focus on high-potential niches.
  • Tailor your questions. You can’t be too assumptive about what people might be prepared to pay for a product or service and asking standard questions in surveys and focus groups might not help. Get your research team to develop a China-specific (and even city-specific) research plan to get into the nuances.
  • If it’s online, think mobile first. Not everyone has a laptop but due to encountering a “technological leapfrog” most people have a smartphone. You can conduct extensive studies very flexibly with mobile methodologies.
  • Test the tech. China does have more controls on internet activity than most. Test that the research platform functions properly, especially if running a study from outside its borders.
  • Work with local experts. Research teams with local knowledge and experience will be invaluable. These tips come as second nature and on-the-ground teams or those in the region with an intimate knowledge of China. They will provide essential depth to research – and frame insights more meaningfully.
  • Think about the media. Consumers love to use their phones to research brands and products, and especially influencers and social media users. Willingness to try brands often stems from these forms of media.

In most other markets – that are less fast-moving or exciting as China – your traditional strategies can secure your traditional wins. In China, research can tell you how and where you might chip away at competitors to help you target your offering more effectively – winning a slice of this lucrative market. It can also help you create a China strategy where the wins look entirely different – and deliver results that make a real difference.

If you’re considering entering the Chinese market, get in touch to discuss how we might be able to help you to build your China market entry strategy. 

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.

Expanding into a new market is one of the boldest moves a brand can make. It’s an opportunity to unlock new customer segments, diversify risk, and drive meaningful growth. But it’s also a calculated risk—one that requires more than ambition to get right.

A new market isn’t always defined by geography. It could mean entering a different region, selling in a new language, or targeting a customer base with distinct needs and preferences. Each path brings its own set of unknowns. And while the rewards can be significant, the failure rate is high. For every successful market entry, roughly four others fall short—often due to a lack of preparation, misreading demand, or expanding too fast.

What separates the winners from the rest isn’t just a great product. It’s the strength of the market entry strategy behind it.

Why enter a new market?

Entering a new market requires time, investment, and a willingness to adapt. So why do it? For many brands, the decision is driven by a combination of growth potential, competitive pressure, and long-term sustainability.

Here are some of the most common reasons:

  • To reach new customers and grow revenue. New markets offer access to fresh audiences who may have never encountered your brand. With the right strategy, this can translate into meaningful business growth.
  • To move beyond a saturated market. If your current market has reached its limit, expansion may be the only path forward. Tapping into new demand can reinvigorate growth.
  • To meet regulatory or customer requirements. In some sectors, regulations or customer needs may require your product to be available in different regions or languages.
  • To keep pace with competitors. If others in your category are expanding into new markets, staying still may leave your brand at a disadvantage.

Not every market expansion is motivated by revenue alone. Sometimes it’s about future-proofing your business, staying relevant, or unlocking operational efficiencies. Whatever the reason, the choice to enter a new market should be backed by evidence—and a plan.

Understand the Customer

A successful market entry begins with knowing who you’re selling to. This goes beyond general demographics. You need to uncover what motivates your potential customers, what problems they face, and how your product fits into their lives.

Research methods that can help include:

  • Focus groups and in-depth interviews (IDIs)
  • Online surveys and quantitative studies
  • Online communities and digital qualitative research
  • Insights from your sales and customer service teams
  • First-hand observation through time spent in the market

These approaches help you tailor your product features, pricing, and messaging to match the expectations and behaviors of your new audience.

Domestic vs International Markets

Once you’ve evaluated your customers and competitors, the next step is deciding what type of market you’re entering. Are you expanding into a new region within your home country, or are you taking your business overseas?

Domestic markets often feel more familiar. The cultural norms, language, legal systems, and infrastructure typically align with what your team already knows. While challenges still exist, the learning curve tends to be shorter.

International markets, by contrast, introduce a different level of complexity. Expanding across borders means adapting to new laws, languages, business customs, and consumer behaviors. There are often logistical hurdles as well, from shipping and supply chains to currency conversion and tax regulation.

Despite the added complexity, international expansion offers unique rewards. It opens the door to untapped demand, elevates brand visibility on a global stage, and strengthens long-term resilience. But the leap requires a deeper level of preparation, local insight, and cultural fluency.

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How to Prepare for Market Entry

Succeeding in a new market depends on more than a compelling product. It requires a deep understanding of the landscape—commercial, cultural, and competitive—and a plan that balances ambition with operational readiness.

Research the Market Opportunity

Before you commit to expansion, assess the market’s potential. What is its size and growth rate? What are the dominant trends, and how stable is the economic and political climate?

Answering these questions often involves a mix of desk research, expert interviews, and primary research conducted with potential customers. The goal is to understand whether the opportunity justifies the investment and to surface any barriers that could limit your success.

Test for Product-Market Fit

What works in one market may not translate to another. You’ll need to explore:

  • Does your product meet a real need in the new market?
  • Are there gaps in the current offering that your brand can fill?
  • Will your pricing, packaging, or positioning need to shift?
  • Are you targeting a demographic with different goals, pain points, or cultural expectations?

Use this early research to refine your offer. If necessary, adapt your value proposition to better align with what matters most to your new customers.

Map the Competitive Landscape

Understanding your competitors is just as important as understanding your audience. Identify the key players in your target market and analyze how they position themselves. Look for:

  • Areas of saturation
  • Untapped niches
  • Mistakes you can avoid

Established brands will have the advantage of local knowledge and customer loyalty. To succeed, you’ll need a plan that sets you apart—either through your offer, your brand story, or the customer experience you provide.

Account for Cultural Differences

Cultural insight is one of the most overlooked success factors in market entry. A message that resonates in one country may fall flat—or even offend—in another. From business etiquette to purchasing behavior, you’ll need to immerse yourself in the local context.

Spending time in the market or working with local partners can help bridge these gaps. At Kadence, we support market entry projects with teams based across Asia, the US, and Europe, offering clients immediate access to local expertise.

Understand the Regulatory Environment

Compliance is critical. Local laws around taxation, trade, labeling, marketing, and data privacy vary widely. One misstep can damage your brand reputation or result in significant penalties.

For example, Europe’s GDPR imposes strict rules around how businesses collect and store personal data. If your expansion includes online operations in the EU, these requirements will apply to you—even if you’re headquartered elsewhere.

Partnering with legal advisors or local experts will help you navigate this complexity and avoid costly errors.

Build a Scalable Plan

It’s not just about entering the market—it’s about sustaining growth once you’re there. Around 65% of startups fail due to premature scaling. Without a clear roadmap, even the best-intentioned expansions can overstretch resources and stall progress.

Create a plan that outlines:

  • How you’ll launch and localize
  • Milestones for measuring early success
  • When and how to scale operations
  • Contingency steps if results fall short

Patience and discipline matter. A slower, well-paced rollout often leads to stronger long-term performance than aggressive expansion with no guardrails.

Risks of Market Entry

Every new market presents opportunity, but it also comes with risk. Brands that expand without understanding the potential pitfalls often find themselves reacting to problems they could have planned for. Below are some of the most common risks to address before you commit to a move.

Cultural Misalignment

One of the most underestimated challenges is cultural difference. Language, customs, consumer behavior, and even communication styles vary widely across regions. If your messaging or product fails to resonate—or worse, offends—you’ll face an uphill battle.

Working with local partners or experts who understand the market’s cultural nuances is essential. Immersion and research can help you align with local expectations from the outset.

Regulatory and Legal Complexity

Legal requirements vary from country to country. You may face unfamiliar tax codes, import restrictions, product certification rules, or data privacy laws. Missteps here can slow down your launch or result in costly penalties.

Take the European Union’s GDPR, for example. These regulations apply to any business handling the personal data of EU citizens—even those based elsewhere. Failing to comply can lead to heavy fines.

Legal due diligence should be a core part of your planning process. It’s best to engage local legal advisors early on.

Political and Economic Instability

Some markets carry higher exposure to political unrest, sudden regulatory shifts, or economic volatility. Currency fluctuation alone can impact your profitability overnight if your business isn’t set up to manage exchange rate risks.

Understanding the local business climate—beyond just consumer demand—can help you weigh whether the risk is worth the potential reward.

Logistical and Operational Barriers

Entering a new market often means building or adapting supply chains, distribution networks, and customer service operations. Challenges in sourcing, delivery times, or after-sales support can erode customer trust quickly.

Consider how your operations will scale across borders, and whether you need to partner with third-party logistics providers or invest in local infrastructure.

Premature Scaling

Even with strong demand signals, expanding too quickly is a leading cause of failure. Brands that invest heavily before securing product-market fit or a reliable operational base may find themselves overextended.

A phased approach allows you to test assumptions, adapt quickly, and scale with confidence. Growth should follow proof—not precede it.

Assess Your Readiness

Before you commit to a market entry strategy, take a step back and assess whether your business is truly ready to expand. These questions can help you identify gaps in your planning and avoid costly assumptions.

  • Does this product solve a real problem for customers in the new market?
  • Are you targeting a different age group, cultural mindset, or income level?
  • Will your existing marketing channels reach the right audience, or do you need to adjust?
  • Is your pricing aligned with local purchasing power and expectations?

Answering these questions early can help you focus your resources and choose the strategy that best fits your goals.

Market Entry Strategies

Once you’ve validated the opportunity and assessed the risks, the next decision is how to enter the market. There’s no one-size-fits-all approach—your strategy should reflect your goals, resources, product type, and appetite for risk.

Below are the most common market entry strategies, each with its own advantages and trade-offs.

Direct Exporting

Direct exporting involves selling your product into the new market without intermediaries. You’ll manage everything from logistics and distribution to marketing and sales.

Advantages:

  • Full control over your brand, pricing, and customer experience
  • Greater profit potential, since no third party takes a share

Challenges:

  • High upfront investment
  • Requires internal infrastructure and export expertise
  • May be difficult to manage across time zones and borders

This approach is best suited to brands with strong operational capacity and a clear understanding of the target market.

Indirect Exporting

In this model, you work with intermediaries—such as agents, distributors, or trading companies—who manage the export process for you.

Options include:

  • Buying agents, who represent foreign buyers and source products on their behalf
  • Distributors or wholesalers, who purchase and resell your product locally
  • Export management companies (EMCs), which handle end-to-end export logistics
  • Piggybacking, where a local company adds your product to their existing distribution network

Advantages:

  • Lower financial risk and resource demand
  • Allows you to test a market without a major commitment
  • Quick access to existing infrastructure and customer bases

Challenges:

  • Reduced control over brand representation and pricing
  • Less direct contact with customers
  • Margins are typically lower due to third-party fees

Indirect exporting is often a smart first step for brands new to international markets.

Local Production or Manufacturing

Instead of exporting products into a new market, some companies choose to produce them locally. This can reduce logistics costs, shorten supply chains, and align more closely with local expectations or regulatory requirements.

Advantages:

  • Faster delivery and lower shipping costs
  • Easier to respond to local demand or customization needs
  • Potential tax or tariff benefits

Challenges:

  • High setup and operational costs
  • Legal and HR complexities
  • Exposure to local market volatility

Local production is more viable for companies with long-term growth plans and high-volume expectations.

Franchising and Licensing

Franchising and licensing allow other entities to operate under your brand in exchange for fees or royalties. While commonly used in sectors like quick-service restaurants, this model also applies to retail, fitness, education, and more.

Franchising provides a full operational model, brand, and support system to the franchisee.
Licensing typically grants use of intellectual property or technology with less operational involvement.

Advantages:

  • Fast market access with minimal investment
  • Local partners carry operational responsibility
  • Scalable across multiple regions

Challenges:

  • Quality control can be difficult to enforce
  • Success depends heavily on the capabilities of your franchisees or licensees

This model is ideal for businesses with strong brand equity and a replicable business model.

Each of these strategies can be adapted to suit your brand’s maturity, product type, and market conditions. In some cases, brands combine multiple approaches—for example, launching through indirect exports while exploring licensing or local partnerships for long-term growth.

Partner with Experts Who Understand the Landscape

Entering a new market is never simple. It takes clear strategy, local insight, and a willingness to adapt along the way. The brands that succeed are the ones that prepare well, ask the right questions, and make informed choices at every step.

At Kadence, we help brands do exactly that. Whether you’re expanding into a neighboring region or launching in a completely new market, we bring the research, frameworks, and local expertise to guide your move. From sizing the opportunity to selecting the right strategy, we work alongside your team to build a plan that’s grounded in evidence and tailored to your goals.

Learn more in our comprehensive guide to market entry, explore our market entry services, or get in touch to start a conversation.

Expanding into a new market is one of the boldest moves a brand can make. It’s an opportunity to unlock new customer segments, diversify risk, and drive meaningful growth. But it’s also a calculated risk—one that requires more than ambition to get right.

A new market isn’t always defined by geography. It could mean entering a different region, selling in a new language, or targeting a customer base with distinct needs and preferences. Each path brings its own set of unknowns. And while the rewards can be significant, the failure rate is high. For every successful market entry, roughly four others fall short—often due to a lack of preparation, misreading demand, or expanding too fast.

What separates the winners from the rest isn’t just a great product. It’s the strength of the market entry strategy behind it.

Why enter a new market?

Entering a new market requires time, investment, and a willingness to adapt. So why do it? For many brands, the decision is driven by a combination of growth potential, competitive pressure, and long-term sustainability.

Here are some of the most common reasons:

  • To reach new customers and grow revenue. New markets offer access to fresh audiences who may have never encountered your brand. With the right strategy, this can translate into meaningful business growth.
  • To move beyond a saturated market. If your current market has reached its limit, expansion may be the only path forward. Tapping into new demand can reinvigorate growth.
  • To meet regulatory or customer requirements. In some sectors, regulations or customer needs may require your product to be available in different regions or languages.
  • To keep pace with competitors. If others in your category are expanding into new markets, staying still may leave your brand at a disadvantage.

Not every market expansion is motivated by revenue alone. Sometimes it’s about future-proofing your business, staying relevant, or unlocking operational efficiencies. Whatever the reason, the choice to enter a new market should be backed by evidence—and a plan.

Understand the Customer

A successful market entry begins with knowing who you’re selling to. This goes beyond general demographics. You need to uncover what motivates your potential customers, what problems they face, and how your product fits into their lives.

Research methods that can help include:

  • Focus groups and in-depth interviews (IDIs)
  • Online surveys and quantitative studies
  • Online communities and digital qualitative research
  • Insights from your sales and customer service teams
  • First-hand observation through time spent in the market

These approaches help you tailor your product features, pricing, and messaging to match the expectations and behaviors of your new audience.

Domestic vs International Markets

Once you’ve evaluated your customers and competitors, the next step is deciding what type of market you’re entering. Are you expanding into a new region within your home country, or are you taking your business overseas?

Domestic markets often feel more familiar. The cultural norms, language, legal systems, and infrastructure typically align with what your team already knows. While challenges still exist, the learning curve tends to be shorter.

International markets, by contrast, introduce a different level of complexity. Expanding across borders means adapting to new laws, languages, business customs, and consumer behaviors. There are often logistical hurdles as well, from shipping and supply chains to currency conversion and tax regulation.

Despite the added complexity, international expansion offers unique rewards. It opens the door to untapped demand, elevates brand visibility on a global stage, and strengthens long-term resilience. But the leap requires a deeper level of preparation, local insight, and cultural fluency.

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How to Prepare for Market Entry

Succeeding in a new market depends on more than a compelling product. It requires a deep understanding of the landscape—commercial, cultural, and competitive—and a plan that balances ambition with operational readiness.

Research the Market Opportunity

Before you commit to expansion, assess the market’s potential. What is its size and growth rate? What are the dominant trends, and how stable is the economic and political climate?

Answering these questions often involves a mix of desk research, expert interviews, and primary research conducted with potential customers. The goal is to understand whether the opportunity justifies the investment and to surface any barriers that could limit your success.

Test for Product-Market Fit

What works in one market may not translate to another. You’ll need to explore:

  • Does your product meet a real need in the new market?
  • Are there gaps in the current offering that your brand can fill?
  • Will your pricing, packaging, or positioning need to shift?
  • Are you targeting a demographic with different goals, pain points, or cultural expectations?

Use this early research to refine your offer. If necessary, adapt your value proposition to better align with what matters most to your new customers.

Map the Competitive Landscape

Understanding your competitors is just as important as understanding your audience. Identify the key players in your target market and analyze how they position themselves. Look for:

  • Areas of saturation
  • Untapped niches
  • Mistakes you can avoid

Established brands will have the advantage of local knowledge and customer loyalty. To succeed, you’ll need a plan that sets you apart—either through your offer, your brand story, or the customer experience you provide.

Account for Cultural Differences

Cultural insight is one of the most overlooked success factors in market entry. A message that resonates in one country may fall flat—or even offend—in another. From business etiquette to purchasing behavior, you’ll need to immerse yourself in the local context.

Spending time in the market or working with local partners can help bridge these gaps. At Kadence, we support market entry projects with teams based across Asia, the US, and Europe, offering clients immediate access to local expertise.

Understand the Regulatory Environment

Compliance is critical. Local laws around taxation, trade, labeling, marketing, and data privacy vary widely. One misstep can damage your brand reputation or result in significant penalties.

For example, Europe’s GDPR imposes strict rules around how businesses collect and store personal data. If your expansion includes online operations in the EU, these requirements will apply to you—even if you’re headquartered elsewhere.

Partnering with legal advisors or local experts will help you navigate this complexity and avoid costly errors.

Build a Scalable Plan

It’s not just about entering the market—it’s about sustaining growth once you’re there. Around 65% of startups fail due to premature scaling. Without a clear roadmap, even the best-intentioned expansions can overstretch resources and stall progress.

Create a plan that outlines:

  • How you’ll launch and localize
  • Milestones for measuring early success
  • When and how to scale operations
  • Contingency steps if results fall short

Patience and discipline matter. A slower, well-paced rollout often leads to stronger long-term performance than aggressive expansion with no guardrails.

Risks of Market Entry

Every new market presents opportunity, but it also comes with risk. Brands that expand without understanding the potential pitfalls often find themselves reacting to problems they could have planned for. Below are some of the most common risks to address before you commit to a move.

Cultural Misalignment

One of the most underestimated challenges is cultural difference. Language, customs, consumer behavior, and even communication styles vary widely across regions. If your messaging or product fails to resonate—or worse, offends—you’ll face an uphill battle.

Working with local partners or experts who understand the market’s cultural nuances is essential. Immersion and research can help you align with local expectations from the outset.

Regulatory and Legal Complexity

Legal requirements vary from country to country. You may face unfamiliar tax codes, import restrictions, product certification rules, or data privacy laws. Missteps here can slow down your launch or result in costly penalties.

Take the European Union’s GDPR, for example. These regulations apply to any business handling the personal data of EU citizens—even those based elsewhere. Failing to comply can lead to heavy fines.

Legal due diligence should be a core part of your planning process. It’s best to engage local legal advisors early on.

Political and Economic Instability

Some markets carry higher exposure to political unrest, sudden regulatory shifts, or economic volatility. Currency fluctuation alone can impact your profitability overnight if your business isn’t set up to manage exchange rate risks.

Understanding the local business climate—beyond just consumer demand—can help you weigh whether the risk is worth the potential reward.

Logistical and Operational Barriers

Entering a new market often means building or adapting supply chains, distribution networks, and customer service operations. Challenges in sourcing, delivery times, or after-sales support can erode customer trust quickly.

Consider how your operations will scale across borders, and whether you need to partner with third-party logistics providers or invest in local infrastructure.

Premature Scaling

Even with strong demand signals, expanding too quickly is a leading cause of failure. Brands that invest heavily before securing product-market fit or a reliable operational base may find themselves overextended.

A phased approach allows you to test assumptions, adapt quickly, and scale with confidence. Growth should follow proof—not precede it.

Assess Your Readiness

Before you commit to a market entry strategy, take a step back and assess whether your business is truly ready to expand. These questions can help you identify gaps in your planning and avoid costly assumptions.

  • Does this product solve a real problem for customers in the new market?
  • Are you targeting a different age group, cultural mindset, or income level?
  • Will your existing marketing channels reach the right audience, or do you need to adjust?
  • Is your pricing aligned with local purchasing power and expectations?

Answering these questions early can help you focus your resources and choose the strategy that best fits your goals.

Market Entry Strategies

Once you’ve validated the opportunity and assessed the risks, the next decision is how to enter the market. There’s no one-size-fits-all approach—your strategy should reflect your goals, resources, product type, and appetite for risk.

Below are the most common market entry strategies, each with its own advantages and trade-offs.

Direct Exporting

Direct exporting involves selling your product into the new market without intermediaries. You’ll manage everything from logistics and distribution to marketing and sales.

Advantages:

  • Full control over your brand, pricing, and customer experience
  • Greater profit potential, since no third party takes a share

Challenges:

  • High upfront investment
  • Requires internal infrastructure and export expertise
  • May be difficult to manage across time zones and borders

This approach is best suited to brands with strong operational capacity and a clear understanding of the target market.

Indirect Exporting

In this model, you work with intermediaries—such as agents, distributors, or trading companies—who manage the export process for you.

Options include:

  • Buying agents, who represent foreign buyers and source products on their behalf
  • Distributors or wholesalers, who purchase and resell your product locally
  • Export management companies (EMCs), which handle end-to-end export logistics
  • Piggybacking, where a local company adds your product to their existing distribution network

Advantages:

  • Lower financial risk and resource demand
  • Allows you to test a market without a major commitment
  • Quick access to existing infrastructure and customer bases

Challenges:

  • Reduced control over brand representation and pricing
  • Less direct contact with customers
  • Margins are typically lower due to third-party fees

Indirect exporting is often a smart first step for brands new to international markets.

Local Production or Manufacturing

Instead of exporting products into a new market, some companies choose to produce them locally. This can reduce logistics costs, shorten supply chains, and align more closely with local expectations or regulatory requirements.

Advantages:

  • Faster delivery and lower shipping costs
  • Easier to respond to local demand or customization needs
  • Potential tax or tariff benefits

Challenges:

  • High setup and operational costs
  • Legal and HR complexities
  • Exposure to local market volatility

Local production is more viable for companies with long-term growth plans and high-volume expectations.

Franchising and Licensing

Franchising and licensing allow other entities to operate under your brand in exchange for fees or royalties. While commonly used in sectors like quick-service restaurants, this model also applies to retail, fitness, education, and more.

Franchising provides a full operational model, brand, and support system to the franchisee.
Licensing typically grants use of intellectual property or technology with less operational involvement.

Advantages:

  • Fast market access with minimal investment
  • Local partners carry operational responsibility
  • Scalable across multiple regions

Challenges:

  • Quality control can be difficult to enforce
  • Success depends heavily on the capabilities of your franchisees or licensees

This model is ideal for businesses with strong brand equity and a replicable business model.

Each of these strategies can be adapted to suit your brand’s maturity, product type, and market conditions. In some cases, brands combine multiple approaches—for example, launching through indirect exports while exploring licensing or local partnerships for long-term growth.

Partner with Experts Who Understand the Landscape

Entering a new market is never simple. It takes clear strategy, local insight, and a willingness to adapt along the way. The brands that succeed are the ones that prepare well, ask the right questions, and make informed choices at every step.

At Kadence, we help brands do exactly that. Whether you’re expanding into a neighboring region or launching in a completely new market, we bring the research, frameworks, and local expertise to guide your move. From sizing the opportunity to selecting the right strategy, we work alongside your team to build a plan that’s grounded in evidence and tailored to your goals.

Learn more in our comprehensive guide to market entry, explore our market entry services, or get in touch to start a conversation.

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.

  1. 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.
  2. 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.
  3. 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.
  4. 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.
  5. 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.

It makes sense to open up new markets for a successful product or service. But how do you know whether it’s worth the investment? What makes for a potential buyer in your home territory might not apply in a new location where the total addressable market could be much smaller or many times the size. Enter the market researchers. We explain how to calculate market potential.

Estimating sales can be a chore even when you have historical and well-honed market instincts to work with. But in a new market this is even harder. There’s no historical data to review and it’s challenging to estimate the kinds of expenses and risks that might crop up.

An inability to judge sales makes the decision of whether to enter a new market much harder. Without a decent estimate – of both sales and likely profits – it’s almost impossible to decide on how you might enter and what kind of investment to make there.

What’s the market really worth?

The starting point is to get a handle on the existing market for your brand or product in the new territory. A basic market analysis is a great starting point. Typically it breaks down into:

  • Market sizing (current and future)
  • Market trends
  • Market growth rate
  • Market profitability
  • Industry cost structure
  • Distribution channels
  • Key success factors

But within each category, there’s lots to research. A more superficial look at the data can be helpful for a ‘first cut’ look at which new markets you might want to enter. But a deeper dive into the numbers will be essential if you’re going to properly evaluate the strategy for what looks like a high-probability candidate.

That more sophisticated analysis could take the form of a total addressable market (TAM) analysis. This looks at both the TAM itself, as well as serviceable available market (SAM). This is the portion of TAM that your company’s products or services play inside; and serviceable obtainable market (SOM), the percentage of SAM which your might realistically reach.

Best guesses?

But getting to SOM for a brand new market isn’t a simple calculation. It’s not exactly easy in markets where you’re a known quantity and understand the competitive environment, either! For businesses in mature categories and with previous experience of being a new entrant to markets, it’s possible to make educated guesses. This can be refined with local research on factors that might shape consumer behaviour.

In some industries that data might be possible to obtain – from industry associations, for example, or government agencies. In others – and particularly in product segments that a relatively underdeveloped in the market you plan to enter – sales figures might be harder to come by.

Then there’s the difficulty of calculating market share. You will know what it might cost in contracts, infrastructure and marketing to build share in existing markets. But the assumptions may be way off-base for a brand new market.

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Talk to people

At this point there are two avenues:

Research sales results that have been achieved by other companies like yours. They don’t even need to be in precisely the same line of business. The lessons of other companies looking to sell into the new markets can reveal both the optimum routes in, the barriers to adoption and the appetite for new brands.

That might even mean contacting other businesses to ask their experience of making the adaptation to the new market – as well as learning about potentially important busy and slow seasons, noteworthy business practices and quirks of the system that might not have a direct bearing on the size of the opportunity, but will allow you to adjust your assumptions.

Talking to local partners, however, is probably the best way of calibrating your expectations. Even if you plan to enter a market by establishing a local entity and investing in your own facilities and marketing, you’ll still be working with many different counterparties. This can span everything from local professional services firms such as lawyers and accountants, to warehousing, distribution or media buying agencies.

They ought to be able to offer anecdotal evidence at the very least; at best, they’ll have insights into the size of the market and chances of capturing that crucial market share. And if the route to market entry is contracting with a local distributor, licensees or franchisees, their sense of the opportunity could be invaluable.

But above all, rigorous quantitative and qualitative market research will reveal a great deal about attitudes and appetites for your brand or product. The more you can contextualise the hard data on existing spend and potential market growth with consumer insight, the more realistic your evaluation will be.

Focusing on behaviour

One other way to address uncertainties about how a new market might embrace a product or service is to think not about that category, or even look at domestic rivals’ sales and strengths. It’s to create a strategy based on consumer behaviours.

If you can analyse why your brand, product or service is successful in its existing markets and break down the results into some key motivators or even behavioural traits of your consumers, it might be possible to assess where those traits are visible in a new market before you enter. In what situations is your product used? What type of people love it? What are those customers’ attitudes across different domains? What role does it play in their lives – and why?

That will require some pretty deep insight into the market you want to enter. Clearly it’s a more useful investment to make if there are other positive signals to encourage you in – fundamentals such as infrastructure, spending power or pre-existing local interest in your brand or product.

How good is your cost analysis?

Knowing your potential sales, market share and growth are all important. But the scale of the opportunity isn’t just sales – it’s profit. And even seasoned businesspeople can misstep when it comes to keeping costs under control in their market entry strategy. Here’s a brief list of costs that won’t affect domestic-only businesses:

  • Shipping costs – which can also fluctuate wildly, as we’re finding out during the COVID-19 pandemic. Consider, also, capacity. Shipping out of markets with a high balance of trade deficit (Europe, US, UK) to major exporters (China, for example) is much easier than going the other way.
  • Legal expenses – from registering a business in a new location, sorting out licensing, contracts, the right insurance cover… and complying with local regulations on everything from product labelling to anti-bribery laws.
  • Foreign taxes – and other local accounting quirks, which might be different depending on your headquarters domicile and the mode of entry into the market.
  • Translation services – for everything from contracts and technical specs, to instruction manuals and marketing.
  • Recruitment and HR – even a light-touch market entry will benefit from putting some employees into the new market to oversee set-up and manage local relationships.
  • Travel expenses – for the above, but also for ongoing check-ins with local teams or business partners.

What do you know about rivals?

Some lucky businesses will find an overseas market where there are few local rivals, legal and business structures that allow them to port across their defensive attributes from existing markets and a ready but as-yet-untapped consumer base. But those will be rare. So to properly understand the market potential, you’ll need competitor analysis. Our typical approach to this considers:

  • Who are your rivals in that market? Not just currently selling what you want to sell, but addressing your potential customers, too.
  • What is their range of products? How easily might they change?
  • How do they pitch their consumers? What messages are they using? Which channels?
  • What is their competitive advantage? What’s their cost base like? What could you replicate – and where can you out-compete them?
  • What’s their market share? How fragmented in the competition? What opportunities does that present either in terms of the industry cost-base or even acquiring smaller rivals?
  • What is their company structure? If they outsource (for supply or support) or license (to address the market), could those be vulnerabilities increasing your potential strength?

In summary

A lack of prior experience and knowledge can make it challenging for companies to assess the potential of new markets. We help lots of business overcome this – not just through the use of primary and secondary market research, but also by having people on the ground in many countries and regions to add specific local knowledge.

This creates a much more rounded view of the market potential – and the optimum ways to tap into it – than simply applying a cookie-cutter approach to market entry. The key steps:

  • Understand the demographic and economic drivers that underpin the total market for your products or services.
  • Think laterally about the broader factors – such as the types of consumer and cultural attitudes – that dictate market size.
  • Analyse existing market activity to deduce a TAM, SOM and SAM.
  • Conduct consumer research to evaluate your specific opportunity in the market.
  • Competitor intelligence will help you test assumptions about potential market share gains.
  • Rigorous local insights into costs and risks will reveal the profit potential – the ultimate rationale for market entry

Find out more about our market entry services, read our expert guide to market entry or get in touch with us to discuss a project with our team.

How you enter a market often dictates whether you’ll be successful there. Different approaches all have pros and cons – and deciding which to choose is as much about market insight as it is financial logic. So what are the four market entry strategies?

Export? Licensing? Franchising? Partnering? JVs? M&A? There are many ways to get into a new market. What situations typically suit each variety? What do you need to know about the market to select the most appropriate options? How do we assess the strengths and weaknesses – and their long-term effect on your business? Here’s our brief overview of your options for an entry strategy into a new market.

Early exposure: the passive way in

Online retail – and social media these days – mean brand exposure in new markets has become relatively easy. Social media shopping, for instance, is becoming an increasingly popular entry point for brands into new markets, particularly if they’re picked up by influencers. This could be by traditional media outlets (like fashionable magazines), web-based trend-setters (such as popular tech review channels on YouTube) or specialist social media influencers on global platforms such as Instagram and TikTok. Most markets have their own versions of these channels – and there are plenty of popular global options, too.

(Caveat: many global influencers, and those within markets, may need inducement to feature products or services. While ‘accidental’ market exposure is possible, you’re still likely to need some kind of strategy for this kind of introduction.)

But e-commerce can be a double-edged sword. Yes, consumers might get exposure to a brand online. But if it’s not available in their market, they can end up buying the next best thing that is available. Your brand could be doing an excellent category building job for local rivals.

It’s also worth looking out for platforms that are not global. In many markets, local e-commerce platforms have emerged. Any attempt to exploit the market will rely on having access to it. (We look into that further in our guide to entering emerging markets.)

In addition to working with local platforms, brands need to consider carefully how to fulfil orders and handle customer relations. Managing all these elements through third parties in a straight commercial relationship can work well. That said, there’s a massive gulf between entering a market virtually via e-commerce and getting ‘boots on the ground’.

That’s not just about commitment. Each of the third parties you work with is taking a chunk of your profit margin. And in some cases – particularly with perishable or heavyweight products, and especially services – the arm’s length approach just won’t work. To access that pool of consumers, you’re going to need a local presence. Here are some main routes in.

1. Structured exporting

The default form of market entry. Consumers and companies in other markets can easily buy your products wholesale, sort out logistics and handle local marketing. Increasingly, brands can ship internationally – riding the kind of passive market entry discussed above – but assigning a local trusted distributor to conduct transactions with your buyers, and even partnering directly with major wholesalers or retailers, is a perfectly good way in.

Working with the right partners can be a make-or-break decision. So thoroughly researching the key players, their terms of trade and their local reputations is vital. Even seemingly innocuous business practices can have a big effect on the way products are handled, sold and supported.

Having local agents doesn’t mean you can ignore the nuances of the local market. It still pays to get under the skin of local retail, for example, understanding any patterns of consumption and thinking about local tastes and behaviours that might shift how a product is presented. Even in an arms-length distribution agreement, it pays to tailor a product to local preferences. Chocolate brands, for example, must cater to both local biases on the flavour and texture of their product – but also the local climate. Getting under the skin of target consumers in new markets is something we’ve supported many businesses with as they’ve entered new territories.

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2. Licensing and franchising

Licensing is giving legal rights to in-market parties to use your company’s name and other intellectual property. Any licensee can produce and sell products under your name or offer services using your brand. In exchange, you get royalties or other payments. It can be an effective light-touch way of entering a market, especially if you’re a service business that needs a local workforce; or your products would benefit from local manufacturing.

But it’s not all plain sailing. How a licensee behaves towards customers, the quality of their output and the local spin they put on your product can affect the brand. That means thorough due diligence is needed on potential partners, and brands that come to the table with detailed research on their new market are much more likely to be able to tie down any important factors affecting those decisions into a contract.

Franchising is similar to licensing but requires a lot more heavy lifting up front. As well as researching any new market before entering it, brands should think about how they will structure any franchise agreement – which will require additional research into local legal structures and potential franchisees; working out what the franchise buys (for some businesses it’s little more than a licence; for others, it’s a suite of processes, marketing support materials and even hardware that come with the deal); and how they might be able to handle disputes with franchisees later.

3. Direct investment

For many companies, setting up a fully-fledged operation in the new market is a big commitment – but also brings huge advantages. This kind of ‘greenfield’ investment – ‘greenfield’ meaning the establishment of new facilities – means complete control over the operations in the new market. Many countries welcome foreign investment of this kind.

Some companies will choose only to enter new markets where this kind of investment is possible – for a variety of reasons. If the product is particularly sensitive to different kinds of handling, for example, or needs to be manufactured to particular tolerances, ownership provides a reassuring level of control.

If that’s the case, the legal and regulatory burden of different potential markets should be a factor in the due diligence process right at the outset. Having local legal and financial advice, in additional to in-market research expertise, is essential.

4. Buying a business

International M&A is still fraught with risks and paperwork, but even in a bad year – 2019 is the last we have figures for, and we might expect 2020 to be an outlier one way or another – cross-border acquisitions accounted for $1.2 trillion. (A ‘bad year’? That was a third lower than the US$1.8 trillion in deals in 2018.) The reason? Buying an existing business is a genuine fast-track for foreign companies to enter a new market.

Market research plays an even more important role in due diligence when you’re buying a business in unfamiliar territory. The traditional metrics you might assess – and even the gut feel of key decision-makers – have to be translated through completely different lenses of cultural and market norms. (Due diligence isn’t easy on domestic M&A deals; it’s much tougher abroad…)

That’s also true, to a lesser extent, with buying a minority stake in a business in your new market. This might mean less up-front investment albeit with less control, too. But in both cases, you’re also buying into local market expertise – which can be invaluable.

That’s also the big benefit of setting up a joint venture­ (JV) – a new partnership between your company and one or more parties where the ownership is shared. You get the benefits of a greenfield start-up; a lower investment than M&A or setting up on your own; local expertise baked in; and legal status as a native in the new market. Many businesses see a JV as a turnkey project: each party brings existing expertise and capabilities to bear for fast deployment.

But be warned: joint ventures only thrive when the contractual commitments of each partner and the beneficial ownership structures are crystal clear. And some big brands have come unstuck in joint ventures where the local partner’s vision for the product or service deviates from their own. Conflict resolution mechanisms are a must. Unsurprisingly, joint ventures are more common in time-limited projects where several contractors need a legal entity to collaborate on a very specific mission – and have clear terms for the joint venture’s dissolution.

Building your intelligence network

The choice of entry route will be dictated by many factors, then – consumer habits, culture, legal status, taxes and tariffs, local business practices, the transparency you can attain around potential partners and more. As a rule of thumb, the less exposure to cost and risk you have, the less control and margin you can secure.

Arms-length surveys and analysis can only tell you so much, however. Working with international agencies who have their own people on the ground in a new market not only means better access to the nuances of consumer behaviours and local trading rules – it also means dealing with people who have first-hand experience of running a business in that market. This approach has enabled to us to successfully support clients in entering new and lucrative markets.

You can learn more about our market entry expertise, or get in touch to discuss a potential project.