Selecting a market is a complex task that requires significant prior research. A company’s products/services can generally be marketed in many countries with very different characteristics, but companies rarely have enough resources to enter several markets at the same time.
But… what should I consider when making the final selection of my target market?
To simplify, we can say there are six criteria for market selection:
- Market size
Choosing one or more markets with strong purchasing power helps minimize the impact of export costs. For companies starting their international journey, it is advisable to choose a nearby country, both geographically and socio-culturally. For example: Portugal, France, Germany, Mexico, Argentina… - Growth stage
Countries should be selected where demand is expected to remain in a growth phase over the medium term. - Competitive advantage
Priority should be given to countries where our product/service offers a competitive advantage over products already being sold there. Competitive advantages may come from product characteristics, such as quality or performance, or from the service offered. - Price
It is necessary to look for an affordable market that allows sufficient commercial margin. However, it is not advisable to position yourself in a market based only on price criteria, since a cheaper competitor may appear at any time. - Partners / collaborators
If you already have a relationship with a local distributor or sales agent, this can be considered a valid criterion for market selection. Keep in mind that this is the market entry phase, and having a partner who can facilitate operations is often essential. - Cost / profitability
Profitability is obviously necessary, so it is advisable to maintain it over the medium term. The more developed the target market, the more resources will be required, but the profit expectations will also be higher.
When selecting a market, it is not advisable to isolate each of these criteria individually. What will make your internationalization strategy successful is the combination of several of them.