With these 7 steps you probably know!
Having a clearly defined target market is key to move your business forward abroad. Market research helps you to know your target market and to make the right decisions if and how to enter the new foreign market.
Based on our experience most companies are able to project sales forecasts on the size of the new target market. But they don’t conduct proper market research on behaviour and socio-economic profiles. So how well informed are these companies before they enter a new foreign target market?
In our opinion market research needs to be included thinking about the group of people who meet a certain demographic and socio-economic profile to which you offer your product or service before you write your marketing and communication plan and enter the new foreign market.
And as the basis of marketing is the customer; you must know the customer’s problems, needs, habits, customs and values in the new foreign market. Habits, customs and values are one of the most important -but unfortunately most often ignored- cornerstones for achieving succes for your new business abroad.
So how would you segment your new foreign target market?
In total there are over 25 different variables to segment the new foreign market. You can break these 25 variables down in the following 5 categories:
- Quantitative Data
- Geographic data
- Demographic data
- Socio-economic data
- Cultural and behavioural data.
And by combining these categories in a matrix, you can define the right target market.
Once you have defined smaller segments in the target market and used more qualitative variables to make it more specific, you can segment the market into smaller markets. Now you are able to target your product or service to the most attractive sub-group (segment) according to their habits, customs, and values.
This information will help you to set up the right marketing and communication plan to get in touch and engage with them.
By the way; knowing the needs, habits, customs and values is important. But it’s also advisable to determine clearly the actual potential demand for your product or service instead of the assumed demand. Let potential customers ask the following questions: “are you really interested in my product or service?” And if so: “are you buying my product?”. Facts, not assumptions!
To give you a kickstart for a proper market research related to your marketing and communications plan, we can advise the following 7 steps:
Use demographic variables to define your target market. Most used parameters are:
- Family size.
You can identify your target market by adding more qualitative variables such as industry/sector analysis and offers from competitors. So you can segment your target market and provide a value-added offer that has a positive impact on the profitability of your business.
You can define your target by conducting market research surveys aimed at revealing the personality, hobbies, values, interests and lifestyle of your audience. In case of buying behaviour, you can study buying patterns or history that gives you more of information about your client, such as purchasing ability as well as their spending habits on special occasions to create attractive promotions, etc.
Engage with your target audience with an appealing tone of voice according to their profile. If you don’t catch the right tone of voice, it will be like you've never talked to anyone. By knowing clearly who intend to sell your product, this will help you optimise your marketing resources, time and money.
You can further segment your target market and choose the appropriate means and timing of communications to connect efficiently with your prospective clients. You have to customise your content (incl. the right USPs and buying motives) so that the customers feel that you are addressing only them, conquering the hearts and memories.
Now you have identified different segments of your target market. It’s time to allow yourself to understand the real customer’s demand and needs. This will make your marketing efforts meet the specific needs of your target group. The result: better adaption of your product.
Market research has been done. You know what to sell to which target group. Now it’s time to think about your communication plan including the right communication channels. Write down which channels your target group are using and start engaging and conversation with them. Including social media channels like Twitter and Facebook. These are great platforms for your customer care too.
Last but not least
Always remember that your target market can be extensive but your specific target group appreciate that you reach out to them with content that suits their personal needs and interests!
Because the outcome of knowing the 5 categories like demographics, socio-economical aspects and size of the target market will determine whether you want to start in the new foreign target market or whether you need to look for a different market for a better fit.
Of course you can adjust your product or service to the local needs and behaviours. That requires additional substantial investments on top of the average investment of USD 150,000 - USD 400,000 to start a business in the new foreign market. But perhaps you should spend this budget to enter an other market...
Do you have other ideas that you have put in place to define your target market?
We want to know! Please drop an email so we can improve these and other checklists to support other businesses better!
To help you out with finding the right new foreign target market we can recommend following sources:
- The World Bank has a lot of statistics per country, topic, indicator, etc.: http://data.worldbank.org/
- The staff of the Online Magazine “Entrepreneur” has an interesting small business encyclopedia. An article about the target market which we recommend: http://www.entrepreneur.com/encyclopedia/target-market
- If you are based in Asia or in Scandinavia we can highly recommend “Apples & Spears”. They are a Market Entry Consultancy and have an extended local network with partners to investigate local market business opportunities. Their website (with great articles): Apples and Spears
- The Market Research Society (MRS) is the world's leading research association. For all those who need, use, generate or interpret the evidence essential to making good decisions for commercial and public policy: https://www.mrs.org.uk/
Or one of our affiliates: