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How to assess ease of entry into a new export market
View transcript for Episode 7 - Ease of entry into a new market recording
1. Business profile
Define the profile of your business and how you position yourself against the competition. This covers everything from who your customers are, to how much trust they have in your brand.
2. Product positioning and pricing
Examine how you currently position your products or services against the competition in the UK. Ask yourself what makes them unique. Define their unique selling points (USPs) and how you’re measuring their performance.
How do you set your UK prices? You should be prepared to assess your export pricing, and revisit when necessary, against factors such as economic conditions, exchange rates, consumer preferences and payment terms.
You can also use a business analysis tool such as the Ansoff Matrix to help prioritise which of your products are best suited in new geographic markets.
3. Place
Reasons for choosing one market over another need to be clear. So start by looking at your competition in the UK and exploring which markets they sell to.
4. Promotion
Finally, check if your UK business model will work in the new market. For example, if it’s based on short lead times here, will that work abroad?
Once you’ve assessed these 4 areas, use a PEST analysis to identify external factors that could impact your business.
See example of PEST model
Political. Economical.Social.Technological
What you’ll learn
- what ease of entry into a new market means
- how to rate your current UK performance and apply this knowledge to entry into new markets
- how to create a framework to compare ease of entry in new markets
What does ease of entry mean?
Ease of entry is your ability to start selling in a new market and get a return on your investment, without having to overcome any major barriers to trade. For example, barriers caused by legislation, culture, technology or political factors.
Know your current business to plan for future success
Before you can assess the ease of entry into a new market, it’s a good idea to see how your business is performing in the UK.
There are 4 elements to this:
-
Business profile
Define the profile of your business and how you position yourself against the competition. This covers everything from who your customers are, to how much trust they have in your brand.
-
Product positioning and pricing
Examine how you currently position your products or services against the competition in the UK. Ask yourself what makes them unique. Define their unique selling points (USPs ) and how you’re measuring their performance.
How do you set your UK prices? You should be ready to assess your export pricing against factors such as economic conditions, exchange rates, consumer preferences and payment terms. Revisit this when you need to.
You can use the Boston Matrix and Ansoff Matrix to work out which of your products are best suited to new markets.
-
Place
Your reasons for choosing one new market over another need to be easy to explain and measurable. Unless you know how your business is performing in your UK markets you won’t be in a good position to do this.
To help you prioritise new markets, you could start by looking at your competitors in the UK, to see which export markets they sell into.
-
Promotion
You need to check if your UK business model works in the new market. For example, if your main USPs were short lead times and good customer after-sales backup, how would these work in a new market in a different time zone?
Likewise, you need to look at how your routes to market affect your models, and consider any extra costs involved.
Compare ease of entry in new markets
If you know your business and current markets inside out, you can start comparing the ease of entry into new markets.
We would recommend starting with PEST Analysis. This is a simple and popular tool which helps you compare the political, economic, socio-cultural, and technological (PEST) factors you need to consider when entering a new market.
For example, if you planned to sell gin to Japan, PEST analysis may reveal that culturally you'll need longer than usual to build trust in your brand before people buy.
Service
“My advice is to choose a market you’re familiar with, that’s not too costly, and is easy to stop exporting to if it’s not going well. But it all goes back to knowing both your target market, and your own market in the UK. Information here is key. That’s really the secret.”
International trade adviser
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