A challenge in writing a comprehensive guide for launching in a new market is making it as general as possible while still keeping it relevant. Some are launching a completely new product, and some are launching an existing product in new markets.
While some are executing a global expansion strategy and others are bringing a rural product in to an urban market. No matter your business expansion you still need to consider your risk mitigation. This guide is meant for you to ask yourself and your stakeholders useful questions to successfully launch in what ever your new markets are.
The first thing you need to define is where and to who are you launching. Is it an international expansion? Or are you targeting a new customer segment? Or is it both? In general, it can be a great idea to only launch in a new market at a time. Maybe you have resources to do more than one market at a time, but when you reevaluate how successful your launch has been you don’t want your data diluted.
If you are launching to a new customer segment in your overseas expansion, would you be able to analyse the data to see what was more successful? Make sure you don’t mix your data up, each product should be tracked separately.
You need to understand who your customers are in order to anticipate the likelihood they’ll purchase the product, set your targeted goals according to this.
Try and envision who your perfect client is. What age, what gender, where do they live, what is their preferred social media, what are their hobbies, what’s their disposable income and much more.
Once you have established this, you can start tailoring the marketing and pricing towards your ideal customer. Everything you do should be an ode to them, you are speaking directly to them. Because when you know this, you can start to define and understand what it is your customers value.
You are operating in unchartered water and you won’t have any previous data to go on. Something that is great about this is that you aren’t biased. You can really let the incoming data and signals shape your attitude.
If you are launching a new product in an existing market, you may already have a customer group. But this new product might capture a completely new customer segment. Perhaps it is a premium version of your old product, then it would make sense your customers are someone else.
A new product and a new market means you might be a new business. If not, you should perhaps consider only choosing one new market to launch in. As not to taint your data, keep different launching seperate so that you can review the clean data.
You have had a successful growth in one group, but now you want to expand into other groups. This expansion is not a global expansion, but rather a new target market within your current home country. Local growth is the step before global expansion, but a necessary step.
A new part of the market opens up new revenue streams, but this new part might be interested in different attributes, availability or features than the current targeted market. While the cultural difference might not be as acute as in international expansion, there will still be some cultural differences.
You need to understand how your brand is perceived in this group, and how your competitors brand is perceived. What drives willingness to pay in this new targeted group, be open minded, perhaps you know your current very well, but this new one might be more different than you would have guessed.
You are looking at a new country, this international business expansion is of course very exciting, but also challenging. International expansion comes with a myriad of challenges. A huge hurdle is payment methods, and another is languages. Depending on where and from where you are doing your international expansion from these will differ in how challenging they will be.
But to understand your new market, you need to understand the same person, that is same demographic in country A might differ from country B. Not only in how they want to pay, but also how much they are willing to pay. You cannot copy paste your strategy in country A, to country B, not only might the currency differ, but the price walls will differ too. You must understand the cultural difference and what this new country value.
How your customers value your product has to do with the elasticity of demand. The elasticity is essentially a way to measure how price sensitive your product or service is. Another way to say this is: if prices increase we will give up on the things we don’t need, such as candy, making candy very inelastic.
The same principle of inelasticity can be applied to luxury goods, such as a gold watch. In contrast an elastic good or service we are very price insensitive too, this means that if price of electricity doubles, we are still willing to pay it because we really need it. A good way to conceptualise elasticity is by thinking ‘how necessary is this good or service to my basic human needs?’ The more indispensable, the more elastic it is.
Understanding your goods or products elasticity as a whole is far more simple than understanding what about your product that drives the elasticity. But this is something we can measure on a very granular level.
Say for example you are selling an electric bike. Your competitors price range is wide, making it difficult to of decipher the market. While you know your margins, you want to maximize your profits. Why set the price at $2000 when you could charge $3000 with no change in amount of sales, thus increasing your profitability with this new revenue.
The question you must ask is, what feature or attribute is it that the customers are paying for. When it comes to an electric bike, is it the engine? Is it the gears? Or perhaps it’s the design of the bike. What your company needs to do is ask the market, of course this is easier said than done. But there are a few who specialise in this, Atenga Insights being one of them. We target your customers and potential customers that highlights what drives the willingness to pay, with our unique pricing strategy.
We have touched upon it throughout the text, but another key into a proper expansion is understanding your product or services feature. You as a company might presume that your flare for sustainability is what your customers value, but this sort of assumptions are usually flawed.
In all of our years operating, we have come across these instances, where there is a huge disconnect with what a business believe their customers are paying for and what the customers actually are paying for.
A neat example of this is when we did a generic sampling of ‘what is important when you buy take away coffee’. This was at the peak of organic and sustainability explosion, where every other coffee stand had those very words printed. It was a general consensus amongst coffee retailers that this organic coffee trend was massive and customers were willing to pay a lot for these organic take away coffees.
But when we asked the market, we found that what actually drove people to purchase coffee was the taste. The answer people gave was: they’d purchase coffee if/because it tasted better than it would have if they had made it themselves at home. In addition, we found that those who wanted to buy coffee because it was organic were willing to pay less than the other respondents, completely juxtapose to what the coffee retailers thought.
This guide is both general and complex, hopefully you have gotten some great insights and thought of some good questions you need to ask yourself before you launch your new product. But one thing we need to touch upon, is something you wouldn’t be able to figure out yourself.
While we don’t intend this to be a hard sales and ultra converting guide, we do offer insights which are unique. This is the granular part of our research design. While you might get a good understanding that women in the suburbs want to pay more than men in rural areas, our insights would tell you as an example: women in the suburbs want to pay $XX for the bike with the leather saddle, and why they would want to pay for that leather saddle.
This kind of granular insights creates a great basis for future business decisions and will contribute to your ensuring that your expansion plans succeeds. Businesses may amplify their growth if they have the groundwork, and a corner stone is to understand ‘exactly for what the customers are willing to pay for in your product or services’. Your business team will also benefit from knowing what they should put the most resources towards.
As we have eluded to throughout this guide, market research is the answer. No gut feeling and no guesses will give you the insights you need. The long term goal is to create value for your intended customers, whether that’s through international expansion or local expansion.
The benefits of knowing what your customers are willing to pay for are tremendous, not only when it comes to your business growth today – but also your growth tomorrow.
So how do I set the right price? You set the right price when you know ‘what your customers willingness to pay is’ and ‘what drives the willingness to pay’. That’s how you capture the market.
Best of luck with your launch, company growth and expansion strategy!
Atenga Insights is a fast-growing, global company that is challenging the pricing consulting industry. Using our unique proprietary PDA™ technology, we identify the price and positioning that will generate higher sales and profits for our clients.