Which market should you enter next?

Blog Which market should you enter next 271015 plaatje 1 which market next

I frequently meet with information technology executives from different parts of the world, and we often discuss issues around internationalization. One typical question is which market (geography) to penetrate first or next.  I ask them the following question:

Assume that we have access to the all information about each individual market in the world.  Which questions should we ask in order to assess and prioritize the markets?

In 10 out of 10 cases, not a single company executive has prepared a list of questions that they must have answered before deciding to enter a new market.  Of course they can come up with the traditional questions like language, market potential and competitors, but it is obvious that they have not worked hard to make a prioritized list of critical and specific questions and the corresponding justification mechanism.

Many information technology companies seem to consider “market analysis” a waste of money and would rather “jump (head first) into the pool” and then check if there is water. Using this approach is certainly possible if we have deep pockets and can adjust as we meet the bridges that we need to cross, but for small companies with limited resources this approach can be deadly.

There will always be uncertainty

We will never be able to know all the idiosyncrasies of a new market, where we have not been operating before, as well as we know our current markets.  Thus we must accept a certain degree of uncertainty, but how can we get a feeling for the most fundamental challenges which we must expect to face in the new market and that will help us to make the go/no-go decision?

Blog Which market should you enter next 271015 plaatje 2 Business vision

Before jumping into the pool we need to find out what we need to know (and skip all the stuff which is just nice to know).  I have a rule of thumb that says we should have around 10 questions.  If we can get reasonable answers to our 10 critical questions then we can get a fairly sober assessment of the market penetrability.

I don’t believe we can get much help from Gartner, IDC, Forrester et al who all operate on a very global level.  It is also highly unlikely that there is an existing and fairly accurate report that addresses our specific market segment (if there is – buy it!!). So what should be done?

I recommend performing  the following types of market intelligence activities:

Web based market research

Blog Which market should you enter next 271015 plaatje 3 web

Obviously a web based research effort will identify most of our competitors, their positioning, their go-to-market approach and also some of their reference customers.  Analyzing industry specific online media will give us an idea of market trends and gossip. When we know what to look for, then this exercise can be done from our desktop (provided we understand the language) and will not take long (4-6 weeks). The web based analysis should prove that there is an open position in the market. If there is no open position, then we need to overcome the competition from established incumbents, which is only possible with very deep pockets.

The demand side analysis

Business partners having discussion over coffee

By interviewing potential customers we can obtain a wealth of information.  What they are doing today in the area that we address, who their current vendors are, if they are satisfied, if and when they are planning to invest etc. (Remember that if we have a list of 1.000 companies, we will be able to get in touch with around 750, and make it through to 500 individuals of which 100 may be willing to talk to us – we shouldn’t take it personally, it is just the way life is). Such interviews must be performed by company representatives and should not be outsourced to third parties unless they are thoroughly trained and made intimately familiar with the business domain, the value proposition and the competitive environment. The demand side analysis will help us verify if the position we have identified is actually open or if we have made a misjudgement in our web based market research.

The supply side analysis

Blog Which market should you enter next 271015 plaatje 5 steps simple

If our demand side market analysis comes out positive then it is time to look more deeply at how our supply side operates and refine the position we will take, avoiding a frontal attack on local competitors that are much stronger than us.


We are now ready to launch into the market, keeping an eye on our performance vis-a-vis our expectations. As no plan survives the meeting with with reality, we must be prepared to adjust. How we evaluate deviations from our plan and our expectations is a subject for a separate post.

I write about issues related to revenue growth and globalization in the software industry.

You can follow me on Twitter: @hpbech


Hans Peter Bech is an author, economist and consultant. He is a frequent blogger on issues related to growing software driven companies to global market leadership and is the author of several books and whitepapers on business development in the software industry.  Hans Peter also facilitates workshops for software executives in the TBK Academy¨. Hans Peter holds a M.Sc. in macroeconomics and political science from the University of Copenhagen. He speaks Danish, English and German and is a certified ValuePerform, ValuePartner and Business Model Generation consultant.




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