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Maryna Hradovich

A Step-by-Step Guide to New Market Assessment

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Maryna Hradovich
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A Step-by-Step Guide to New Market Assessment

International expansion can generate benefits that can change a business forever. If miscalculations are made at the stage of market assessment, though, it might cause damage that can’t be undone.

Everyone from the business development manager to the head of marketing needs to evaluate a future market’s business potential by understanding the product demand and competitive offerings in the target region. 

This market assessment should all be done before making the ultimate decision to expand into a new country. There is always an element of risk involved, but the rewards can be worthwhile if you thoroughly research your opportunities. 

In this guide, we will walk you through how to assess a market with a range of intelligent tools so you can be more confident about developing a go-to-market strategy for a non-domestic region.

Top Markets for International Expansion: Are There Opportunities in Your Target Region?

The USA currently ranks as almost one-fourth of the total global economy. If you plan to grow your business within the country, this might be encouraging, but if you plan to expand beyond your domestic market, you can start by assessing your options with other leaders by GDP.

As the percentages of GDP share indicate below, those that follow the USA in the top five — China, Japan, Germany, and India — might be full of untapped potential for your particular product or service, but it’s important not to write off any key player in terms of GDP at this stage. It’s even more important to recognize that these standings will almost certainly change over time.

Top Countries by GDP

The next graph projects some significant movements by 2030.

It’s estimated that China will continue to expand to eventually move into first position for economic growth. India is predicted to surpass today’s leaders, too, whilst several more economies could strengthen their positions. The global picture by GDP might look very different in 10 years.

Estimated Top 10 Countries by GDP in 2030

If such growth happens, the opportunities could be huge, and, if you seize them, you could find yourself in good company.

Netflix, for instance, now has about 56% of its customers outside the US. In 2010, it operated solely on the domestic front, but today, 90% of its growth is fueled by international markets.

Many large US companies report that close to or more than two-thirds of their total sales come from outside the US. They include Intel, Mondelez, ExxonMobil, Apple, and GE.

So, a cursory global market assessment shows that there might be opportunities for certain offerings around the world in years to come. The question is: how do you select a country to start an expansion of your own?

The Key Steps of Market Assessment

A foreign market assessment can be done on a step-by-step basis, considering everything from local competitors, to cultural barriers, to consumer behaviors. 

Before you even start looking into a potential new market, you need to understand your product-market fit in your existing one. Ask yourself: does your offering genuinely satisfy a strong consumer demand in your domestic market, and how can you learn from it to enter a different one with different buyer behaviors?

If you do not see growth in your current region, expanding elsewhere might not be the answer, as it could indicate that your solution is not aligned with your customers’ needs. 

Take the time to hone your product, understand your customers, and refine your marketing message at home before following these steps to prepare for a completely new market.

Step 1. Choose a Specific Country for Evaluation

Market evaluation should guard you against expanding into any other region in which you are not yet active simply for the sake of it.

The likes of Europe, Asia, and Africa boast incredibly diverse populations with unique histories, cultural beliefs, languages, behaviors, aspirations - the list goes on. An ad campaign designed for the British, for instance, will not resonate with the French, the Greeks, or the Russians.

It’s crucial to carry out market opportunity assessment on a country-by-country basis if you are to take all of this into account as part of a calculated and considered approach. 

Of course, the question arises: how do you pick one target country for your international expansion? That's where strategic and meticulous market research comes into play.

Step 2. Analyze Internal Data for Consumer Behavior and Funnel Activity

Start by carefully analyzing your in-house data to discover whether or not it can impact your company's foray into a new market.

  • Do you see a surge in leads from a particular market, despite not investing heavily there?

  • Do you see a shorter sales cycle or a higher win rate in some countries?

  • Is the average purchase price higher in a given market?

Your sales and business development colleagues should help you gain these insights, and you might also want to check your preferred analytics platform for such geo data

Most platforms track traffic distribution by location so you can see where it originates, what happens to that traffic upon arrival, and to what extent it converts.

A lot of traffic coming from one country coupled with encouraging engagement metrics and lots of conversions may indicate an entirely accessible target for your market expansion.

Contrastingly, low conversion rates for the traffic from another country can mean that you need to localize your product, your site, or both, if indeed you are to expand into it.

Step 3. Research Your Competitors’ Top Markets

Imagine you’re operating in the sphere of payment technology and competing against companies such as Square. Based on the Geo Distribution stats in SEMrush Traffic Analytics, you can quickly understand where your main competitor (in this case, Square) has a notable presence.

Let’s say it's performing strongly in the US, Canada, Japan, Australia, and the UK. These would be Square’s top markets, but you can (and should) dive deeper to reveal all of the markets in which it is active.

When you take a look at engagement metrics to see if those who come to Square's website are equally engaged around the world, some interesting insights emerge.

Global Traffic Distribution for squareup.com

Since Japan is among the top economies in the world, you might feel compelled to enter it simply because your competitors are doing so.

You'll likely also notice that the number of visits from Canada is high, while the bounce rate is low by comparison. This can be a signal that consumer interest is significant in that area, and there may be potential for a company like yours to satisfy it in a different way. Remember, though, that it might instead indicate that consumers are already satisfied with their options.

Next, you'll want to gain a complete understanding of your chances (and, in the example, Square's chances) for position and strategy within that market

Step 4. Get a Full View of the Competitive Landscape in a New Market

As well as spending some time researching individual competitors, you'll want a thorough understanding of the whole market to properly pinpoint your opportunities. 

Investigate activity in your target country by taking a look at the SEMrush Growth Quadrant in the Market Explorer tool. We’ll continue researching the competitive landscape for Square in Japan here.

You can see that Square is a Niche Player in the country, with several regional competitors. Among these, you will see a local accounting software company named ‘freee’ positioned as a Leader.

Researching squareup.com's competitive landscape in the Growth Quadrant

At this point, you may wonder what freee is doing better than everyone else in this market. 

You can dive right in by using the same Market Explorer tool to analyze their traffic generation and social media distribution strategies compared to market averages. Further investigation could give you great insight into the tactics they employ to attract and engage customers in this market.

You should also pay attention to the Game Changers. The companies in the upper-left corner may not have a great deal of traffic (Traffic Volume) right now, but you can see that their Traffic Growth is higher than that of Square. 

Some of them may have received funding recently, and could be planning continued expansion into this market. You will want to make a note of these companies and their market potential to help identify your own potential opportunities.

More on this How to Estimate Market Potential with Fast and Cost-Effective Competitive Landscape Analysis Post Elena Kozlova

Step 5. Estimate Your Potential Market Size and Competition

You will obviously want to enter a market that has the most significant opportunities for your business, so you need to know how to assess the market size.

If you enter a competitor’s website in Google Market Finder, it will provide information about regional searches and automatically suggest categories associated with the URL. For squareup.com, it suggests “e-commerce” and several more. 

You can adjust those categories to the ones that better reflect your business — one option is to look them up in SEMrush Market Explorer’s In-Market Audience Interests.

Find a new market for a website with Google Market Finder

You will be presented with the most significant markets first; for Square, these will be the US, Germany, and the UK. If you're looking to expand into Japan, you will need to investigate further.

If you refer to the detailed research option, you'll get a much longer list of countries in which you could operate. Go ahead and eliminate the US as your domestic region, and you will be left with Germany, the UK, Japan, France, and Australia.

When you take a look at the CPC results on Google, you will notice they are relatively high for Japan. For starters, it means that market expansion into Japan could prove to be quite expensive. At the same time, a high CPC is a result of high competition, so this may tell you that the market still has plenty of appetite.

Estimate the size of a market with Google Market Finder

Google Market Finder is a great way to estimate the size of a market, but bear in mind that sometimes you will need to adjust for different search engines and use different market assessment tools as you seek international expansion. 

Here, we are looking at Google's data and the popularity of the keywords that fall into the defined categories. If the most popular search engine is different (like Yandex in Russia), you'll need to take this into account as you explore the percentages.

You can also find market demand and research your potential customer base in a target region by scrolling through the list of your competitors’ Top Pages in SEMrush Traffic Analytics.

Take a look at line two below, for example. It provides stats for the login page on Square’s website, including the number of unique users from Japan that have visited this page.

This estimate can provide you with useful insight into how many customers your competitors have in any given region, and, in turn, allow you to better understand their behaviors.

Research your competitors in a new market

Step 6. Assess the Difficulty of Doing Business in the Target Country

Next, you will need to research how easy it is to do business in a specific country. You'll find this information in the third column of Google Market Finder.

Returning to our Square example using Google’s tool, Japan ranks 29th out of 190 when it comes to the relative ease of doing business there. 

This should lead you to consider the likes of the state of their local economy, their overall position in the global economy, and their average disposable income per household.

It’s one thing having a viable product, but it’s another finding the customers who are willing and able to pay for it.

In Google Market Finder, you will notice the average household disposable income in Japan is much lower than in other markets, such as the UK and Australia.

In this instance, you would need to check OECD Data or the OECD Better Life Index to get a better understanding of how Japan’s level of disposable income might affect your ability to succeed in that market.

Alternatively, you can evaluate the competition in the target region by the overall number of market players suggested by SEMrush Market Explorer, and their distribution within the Growth Quadrant. For instance, if the tool shows you multiple Game Changers, it could be a sign of a fast-developing market that is worth your time and effort. If quarter-over-quarter and year-over-year comparisons show little movement in the Established Players quadrant, it is probably a difficult market to penetrate. 

Step 7. Consider Language Barriers and the Expense of Localization

A new market like Japan might look incredibly attractive at first sight, but you might find barriers like language a significant challenge.

When you start to expand beyond the English-speaking world, you must consider English proficiency in the target region, in addition to the likes of consumer behavior, market volatility, and economic growth.

For example, English proficiency is high in Germany, moderate in France, and low in Japan. This means the costs associated with the localization of your product, and all the communication therein, could differ greatly between these countries.

English proficiency ranking English proficiency across the globe. Source: https://www.ef.com/wwen/epi/

Step 8. Benchmark Your Performance Against the Competition 

By this point, you will have conducted some preliminary market evaluation. Now you need to develop a deeper understanding of the competition, and benchmark your performance against it in order to find marketing opportunities. You can do this in three steps with the help of SEMrush Traffic Analytics:

  1. Benchmark your website’s performance against that of your competitors in your domestic region.

Make sure you're stable in your domestic region. If things are not looking great at home, then spend some time working out why so you can fine-tune your strategy before venturing off into a new territory. 

2. Compare your domestic competitors’ performance in your new target region.

Find out which strategies they may have tested when entering the market, and take note of the tactics they employed to do so. There is always something to be learned from previous market movements, and you may not need to reinvent the wheel.

3. Compare the traffic volumes of your domestic competitors and your new target region’s local players.

Compare the traffic dynamics between countries and analyze the differences in online behaviors in each region. Look for patterns based on the seasons or current events to give you a better indication of how to compete in this market.

Compare the traffic dynamics in new markets

Step 9. Fill in the Market Assessment Decision Matrix

Expanding into a new market obviously requires plenty of research to develop a solid plan. Fortunately, you can organize all of this research in one location with our Market Assessment Decision Matrix. You can copy the spreadsheet to your Google Drive by following the link and then filling in the table with all the data you’ve gathered.

This matrix is a convenient way to gather all relevant metrics in one place to identify which country receives the highest score and could have the most potential.

You can use it to inform your strategy when it comes to identifying your target customers, and benchmarking yourself against your core competitors to ensure your readiness for launch.

Step 10. Move On to Your Strategic Market Expansion Plan

Traditionally, compiling and analyzing all of this data would have proven challenging, if not impossible on your own.

Today, however, there are many market assessment tools at our fingertips to make the process more accessible and insightful than ever before.

By following the steps outlined above, you can start devising a detailed plan for expanding into the market(s) that will be the most rewarding for your business.

Let us know about your experiences of researching and entering new markets in the comments below.

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Maryna Hradovich
SEMrush

SEMrush 员工。

Vice President of Strategic Growth and Development at SEMrush. Keynote Speaker. Digital marketing and SEO enthusiast.
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