Know your target market
Back in 1985, a scientist/business entrepreneur called Clive Sinclair (later to be knighted for other achievements) unleashed a brand new product concept onto the world. An electric car!
Well, to be precise, it was more a single user, battery powered transport “pod” and was positioned as an alternative to mopeds and scooters. It had a limited range on account of the battery technology then. The main body was plastic and the seating position was only several inches from the ground, leaving occupants feeling very vulnerable when “driving” in conventional traffic conditions.
So sure that the product was going to be a run-away success, Clive Sinclair invested several millions of his own money into the project. He even bought a factory, earmarked for closure, from Hoover and set up a manufacturing facility there employing many people.
After a disastrous product launch, scathing reviews from the press (the Sunday Times called it a “formula one bath chair”) and struggling sales, production was wound up in August 1985 – the factory closed and the project closed by the end of that year.
One notable customer was Kensington Palace who purchased two for the then young princes, William and Harry, as “toy cars” to run around the house and gardens in.
The point of this story is simple. Sir Clive had done NO market research before embarking on the project and was utterly convinced of its success based purely on his own belief that people would fall in love with his technology.
Now, of course, just about every car manufacturer in the world is investing heavily in electric vehicle technology. Battery capabilities are so much better and there is a hungry market; driven partly from a strong “green” lobby globally.
When a business owner is looking to embark on expansion into a new market, whether domestic or overseas, the experiences of Sir Clive illustrate clearly the need for thorough market research upfront; before any investment is made or resources committed.
Knowing who your customer is and what they want to buy is crucial to the success of any new venture. Yet so many business owners get caught up in the “excitement” of new markets and customers without really thinking through a proper plan.
The result is often similar to Sir Clive. A mis-match of product/service to customer and a squandered investment.
To help bring things into focus a little, below is a quick list of some of the basics to look at when venturing into pastures new (note – I have not included USP in the list as this is a subject in itself):
- Customers
- Who / Where
- Products
- local demand?
- which products/service
- Competitors
- Who / how well are they doing
- Local issues
- language
- marketing
- legislation/compliance
- currency
- Legal issues
- protect your Intellectual Property (IP)
Let’s look at these in a little more detail –
- Customers
Define who it is you are trying to sell to and if it is in a specific market segment or niche.
For example: consumer or B2B? In which case, small business (SME, generally defined as up to around 25 employees) or larger. A niche sector could be education, retail, financial, manufacturing, etc. The list is almost endless.
If it is a consumer market you are aiming for then try and break it down to things like sex, age, life-style, financial bracket, etc. Again the list is extensive.
This exercise will save a great deal of time and effort when it comes to defining an effective marketing plan.
Finally, try to identify where your customers are located. In a smaller, growing market this may not be as relevant, but in a larger, mature market (such as Germany for example), there could be regions you need to focus on, which may entail a degree of targeting in specific regions.
- Products
In the course of the research answering the above questions determine as best you can, if there are any strong regional demands.
If there are then is this for a particular product or service in your portfolio.
It is worth a thought that you don’t have to sell your whole range from day one. Start with a limited, targeted product launch and then expand the range as and when you become more established.
- Competitors
Who are they? How many are there? How well are they doing?
If there are lots of competitive companies in your target market and they are doing well, then it maybe that market is going to be tough to penetrate.
For instance, establishing a new brand in a retail environment where there are lots of incumbent players is a tough ask and requires a considerable investment.
There a many, family-run, successful food retailing businesses who would love a chance to sell into the UK. However, the brand creation and demands from the large, established outlets can be prohibitive. The UK consumer market is huge, but it comes with a price!!
In a niche market sector where competition is limited, the “opposition” may well be known to you. Give them a call and ask how they are doing. Why not? You may be surprised by their response!
- Local issues
There are a myriad of things to consider when trying to develop a new market, but upfront research will again serve well, particularly when it comes to the time to develop an effective marketing strategy.
The most obvious of these is probably the need (or not) for local language. Whether this be in marketing collateral or web site material, often having material in a local language not only helps to engage with B2B customers but also helps considerably with a consumer base.
Whilst top level management are usually conversant with English language in a business context, engaging with people further down an organisation or the general public, can become more of a challenge when not in a native language.
One word of caution here is to always get content checked by a language translation company before publication. Do not rely on web tools for accurate translations. Particularly in the case of any technical or legal content.
Another issue worthy of checking are any local legislative requirements. This becomes particularly relevant in developing markets and ones further afield from Europe.
Finally in this section, the issue of currency. What will the customer expect to be invoiced in?
As an example, in the US market, it will almost certainly be expected to be US$. European customers will expect local or, in the main, € (Euros).
A conversation with your local bank in the UK will satisfy most requirements. Although be aware, some banks, even the High Street names, become nervous about credit to some overseas markets. Essentially be certain to set up the required currency arrangements early on in the process as it can be awkward if this is not sorted once you start trading.
- Legal Issues
Leading on from the above, comes the important issue of patent protection. Particularly key with new overseas markets. If you are expanding outside the UK, then you should look to obtain patent protection for each market/country you wish to trade in, not just a blanket international cover.
As with local language advice, it is always wise to consult a patent expert when filing for protection; just to make sure you have all aspects covered adequately. Omissions can be costly in the long run.
There are other issues not covered here that are equally important, but are separate subjects themselves – such as customer support, logistics, marketing and more.
However, if thorough market research is carried out prior to a sizeable sales and marketing investment being committed, then this enables you to really understand a new target customer base and a great deal of the other issues become more logical to address.
One final thought – if Sir Clive had got it right, we could all be driving a C5 today!!
Originally posted 2020-10-02 11:54:00.
He has more than 20 years under his belt and many happy customers. He works with business owners to help them make a success of exporting, enabling them to win and retain new customers quickly, while minimising the costs and risks, often associated with breaking into new markets.
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