A key moment in the life cycle of many companies is the one in which they decide to expand through penetration in new international markets. It is a complex process in which we must consider factors of vital importance, so that the analysis and exhaustive study of them acquires a leading role when choosing the market in which it is more likely to reach the success.
The technologies that include Location Intelligence provide a new perspective when it comes to approaching entry strategies in new market niches. Thanks to them we can obtain more precise data that allows us to make such a transcendental decision with the security that gives us the reliability of them.
One of the main barriers that companies find when it comes to expanding business horizons is, among others, the lack of information on foreign markets. In addition, you must have guarantees of the reliability of these data and consider the associated uncertainties. This, together with the fact that in many cases the differences between some markets are minimal, makes it very difficult to make the decision to choose a country among a range of options.
We can also come across a situation in which, according to studies carried out by traditional means, there is hardly any difference between niches, but when we face reality we can find ourselves with a very different panorama.
In these conjunctures, Location Intelligence can provide us with that determining factor that can make us decide on the choice of a particular market. Thanks to it, we can draw on valuable information aimed at providing solutions for internationalization.
Factos that determine the choice of a new market
There are many aspects that are of interest for the study of new countries as a destination for business expansion. Therefore, we must execute a series of research processes in order to obtain the greatest amount of quality, practical and reliable information that will lead us to the most optimal choice.
Traditionally, the first steps to carry out a market study consist in carrying out SWOT and PESTEL analyzes.
A SWOT study consists of briefly capturing the internal (Strengths and Weaknesses) and external aspects (Opportunities and Threats) of the company. This diagnosis will serve as a tool to draw the strategic lines for a short, medium and long term future.
On the other hand, the PESTEL analysis deals with more generic aspects than the SWOT, such as Political, Economic, Sociocultural, Technological, Ecological and Legal factors.
It is important to choose the sources of information appropriately, since deciding on the basis of incorrect, biased or obsolete data can have fatal consequences. These sources can be classified into two large groups: primary and secondary.
The primary sources of information include those data that have been compiled expressly for our market study. They are usually collected through techniques such as surveys, consumer panels, consumer observation or social experimentation. With regard to secondary sources, these are those that have an external origin to the company, such as publications in different media and formats, economic and commercial information from institutions and organizations, etc.
Among the large number of information available, we can highlight some of the most outstanding for the choice of a destination market.
One of them would be to know the acquisitive power of the inhabitants of a certain country. This is a very important type of information for the pricing of our products or services. For example, in countries with high levels of income it is not advisable to enter with low prices, since the public can interpret these prices as a sign that something of inferior quality is offered.
But the level of income will not only determine our prices, but also will serve to modify other characteristics of the product or service, such as size, materials used in their manufacture or benefits offered.
It would also be remarkable to have detailed information on the behavior of consumers in the target country. Thanks to them we can know what kind of products they consume and the amount of money they invest in them.
With this data of consumption habits we can get an idea of whether what we offer could have success in that country or if it will be necessary to make some changes that make it better adapted to the reality of the market in that region.
Other sociodemographic aspects such as age, educational and cultural level, unemployment rate, average life, lifestyle, how it relates socially, marital status or beliefs can tip the balance towards the success or failure of our mission of internationalization.
To be aware of the relevance of demographic data we can think, for example, of the low acceptance that a product would have for a young audience in a country with an aging population.
Of course, before taking the step of entering a new market, we must make a study of the competitors present in it.
We will have to consider factors such as the degree of penetration, price and product policy, location of the points of sale, public loyalty to them and other variables that are of potential interest to know how the competition works in the market in which we want to enter.
How Location Intelligence can help enter in new markets
Although all the variables described above are still mandatory study when making the decision of international expansion, it is true that some of them can lead to inaccuracies, errors or not being updated, so they can lead to wrong choices.
This is where Location Intelligence comes in and the solutions it provides so that a decision of such importance can be sustained on a strong foundation built on the basis of quality data.
Thanks to these technologies, we can now monitor many more scenarios than those traditionally studied. Most of them respond to consumption habits (economic spending, preferences of products or services, frequency of purchases, seasonality of the same, etc.). All linked to a geographical component that allows us to extract information of immense usefulness and value.
With these Location Intelligence tools we have a huge amount of real-time data that can be processed and, from them, extract value that can be used for optimal decision making. When working with current and properly treated data, the conclusions drawn are much more reliable than those inferred by traditional techniques.
As a result of the treatment of this information we can know, for example, in which regions or cities there is a certain level of income, a range of age, educational level or more adequate unemployment to be able to offer our product or service.
It is also worth noting the amazing potential of having to cross different data from different sources to reach unimaginable conclusions until recently. For example, we can combine information from our own sources with huge amounts of data that generate technologies such as the Internet of Things (IoT).
A sample of this is the fact of combining data on the consumption of credit cards with information collected from the activity in social networks in a specific geographical area. This could outline the profile of an average customer for that specific area.
The Open Data philosophy has also contributed greatly to improving the information supply. Through it, public institutions and governments make information available to the citizen in a transparent manner and, of course, comply with the law.
In order to collect and integrate the information offered by different sources, both public and private, Geographica has participated in the development of CEDUS, a solution that predicts behavior and produces useful maps for decision making.
CEDUS is not the only resource developed by Geographica that can serve as a way to obtain information in order to penetrate new international markets. In this sense we can also talk about Vodafone Analytics, with which you can collect data related to the flow of people or their habits of connection to the network.
Another tool that can give us great value in this regard is Mastercard Retail Location Insights. With it, data is collected of the millions of transactions that occur daily, thus being able to extract sociodemographic and economic information of great value when deciding if the market in which we have set our focus is appropriate.
Although, from a theoretical point of view, the variables that influence the decision to enter a new foreign market have not changed excessively, it is true that new tools have emerged that have allowed deliberation on it based on consistent, reliable and updated.
Today and thanks to the technology based on Location Intelligence, we have at our disposal an infinity of data compiled by diverse sources that can be processed in real time and reflected in dashboards that allow its visualization in a comfortable and optimal way for its analysis.
For our part, there are several solutions developed by Geographica that can be used for the study of all this amount of information and that act as support to decide in which new international market to enter.
According to some studies, the number of Spanish export companies rose at the beginning of 2018 to 161,454, assuming an increase of 50% in the last ten years. These numbers have set a historical record and tell us about the importance of seeking new markets for certain sectors of the Spanish business scope.
We have seen how many facets of marketing have been highly benefited by the different applications based on Location Intelligence that have been developed, establishing substantial changes in decision making of such depth as the choice of the most propitious markets in which to enter.