Choose your next market wisely. How to Prioritize Markets for Growth and Expansion

By Fredrik Udd

Expanding a business beyond borders can be an exciting venture, but it’s not without its challenges. Many companies make the mistake of embarking on international expansion without a well-thought-out strategy, resulting in wasted time and resources. To ensure success in new markets, it’s crucial to prioritize your efforts based on data rather than gut instinct. In this guide, we will explore how to prioritize markets for international expansion, in other words how to identify the most attractive markets for your products and services so that you can allocate your time and resources effectively.

Benefits of a thorough research and analysis

By conducting thorough market research and analysis, you can:

Identify the most attractive markets: By examining various data points and indicators, you can determine which markets offer the greatest potential for your product or service. This allows you to focus your efforts on markets that are more likely to yield positive results.
Allocate resources effectively: International expansion requires significant investment in terms of time, money, and manpower. By prioritizing markets based on data, you can allocate your resources strategically, ensuring that you focus on markets with the highest potential for success.
Make informed decisions: Gut instinct can be valuable, but it’s not always reliable when it comes to market selection. By using a fact-based approach, you can make informed decisions that are backed by data and analysis. This increases the likelihood of making the right choices for your business.

Common mistakes to avoid

Before delving into the process of market prioritization, it’s essential to be aware of common mistakes, such as:

Lack of research: Avoid diving into international expansion without conducting thorough research. This can lead to entering markets that are not a good fit for your product or service, resulting in wasted resources and missed opportunities.
Spreading efforts too broadly: Avoid entering multiple markets simultaneously, without focusing your efforts. This can dilute resources and prevent you from achieving significant traction in any particular market.
Relying solely on gut instinct: While gut instinct can be valuable, it should not be the sole basis for market selection. Gut feelings can be influenced by personal biases and may not always align with the reality of a market’s potential.

To avoid these pitfalls, it’s crucial to adopt a fact-based approach to market prioritization. This involves conducting thorough research, analyzing data, and making informed decisions based on reliable information.

Step-by-Step Guide: How to prioritize markets effectively

To identify and evaluate potential markets effectively, it’s helpful to have a framework or model to guide your decision-making process. We use a framework that we call MPA – Market Prioritization Analysis. In the MPA model, we look at markets from two perspectives, (1) the market attractiveness, and (2) how easy it is to capture the market. The most promising markets are those that present a high attractiveness while being relatively easy to enter. The process to carry out a Market Prioritization Analysis consists of several key steps. Let’s explore each step in detail.

Pre-selecting markets

Begin by identifying the potential markets you wish to evaluate. These can include countries, regions, cities, industries, or even specific multinational companies. The goal is to narrow down your focus to a manageable number of markets for further evaluation.

Selecting evaluation criteria

Determine the criteria that will be used to evaluate each market. These criteria should align with your business objectives and reflect the factors that are most important for your success in a particular market. Examples of evaluation criteria can include market size, growth potential, competitive landscape, cultural fit, and regulatory environment.

Finding reliable data

Gathering reliable data is crucial for accurate market evaluation. Look for reputable sources that provide relevant information on the markets you are evaluating. This can include government databases, industry reports, market research studies, and trade associations. Ensure that the data you collect is up-to-date, comprehensive, and specific to your industry or product.

Analyzing the data

Once you have collected the necessary data, it’s time to analyze and evaluate each market based on your chosen criteria. Assign weights to each criterion to reflect its importance in your decision-making process. Set threshold values to determine which markets meet your minimum requirements. This will help you identify the most promising markets that align with your business objectives.

Weighing the data and results

Consider the overall scores and rankings of each market based on the evaluation criteria. Take into account the relative importance of each criterion to your business objectives. This will help you prioritize markets based on their potential for success.

Drawing conclusions

Based on the analysis and evaluation, draw conclusions about which markets are the most attractive and have the highest potential for your business. Identify the top markets that align with your objectives and present the best opportunities for growth.

Next Steps: Validation and continuous monitoring

Validation of selected market(s)

Conduct further research and analysis to validate your chosen markets. This can include additional market research, customer surveys, competitor analysis, and validation of key assumptions. Ensure that the market conditions remain favorable and that your initial analysis holds true.

Continuous monitoring of performance

Once you have entered a market, it’s crucial to continuously monitor its performance. Track key metrics, customer feedback, market trends, and competitive developments. This will allow you to adjust your strategies and tactics as needed and ensure ongoing success in your chosen markets.

By following these next steps, you can ensure that your market prioritization efforts are effective and that you stay on top of market dynamics to maximize your international expansion success.

Conclusions

Market selection is a critical and necessary step in international expansion, and it should be approached with a fact-based mindset. By prioritizing markets based on data and analysis, you can allocate your resources effectively and increase your chances of success. By incorporating online tools into your market selection process, you can harness data-driven insights, mitigate risks, and capitalize on opportunities. Remember to avoid common mistakes, gather reliable data, and continuously monitor your chosen markets for ongoing success.

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