Choosing Foreign Markets in the Software Industry – 2
Links to previous posts in this series are listed at the end of this post.
Entering a foreign market in the software industry is a very strategic decision. Finding, winning, making, keeping and growing customers in foreign countries requires establishing infrastructures, which can drive the marketing and sales processes as well as the implementation and support activities. Customers in foreign markets will be reluctant to do business with us unless we can demonstrate a solid commitment for the long haul.
A competitive product is not enough.
What is Different in Foreign Markets?
In our whitepaper “Entering Foreign Markets in the Software Industry” we present a framework for identifying those characteristics that may change as we move into foreign markets. We introduced Alexander Osterwalder’s business model environment framework to help in identifying those issues which have an impact on our business model.
The Ideal Market Profile
If we had 100% visibility into all markets then how would we rank them?
To answer the question “which markets should I choose?” we must first explore which market properties we should add to the equation.
Just as we define ideal customer profiles (and ideal partner profiles) we must also define ideal market profiles. We cannot find and prioritize markets unless we know what we are looking for and how we should value or rank the various characteristics.
TBK Consult has developed an approach that recommends identifying 10-20 key characteristics for measuring market attractiveness. Such characteristics can be anything from size of key market segments, available channels, competitive situation, market requirement characteristics, etc.
While these characteristics can be used in benchmarking potential markets against each other they do not answer the question of which markets to consider in the first place. Bringing the number of potential markets down from the theoretical 220 countries available to a more manageable list must be based on some high level considerations.
Gaining market insight is costly and time consuming, thus we need to qualify markets on a few readily available characteristics, narrowing down the list to 5-10 where we can invest in Market Reports and Market Assessments before making the final investment decisions.
The process of reducing the options from the 220 countries available to the “best few” has six simple steps.
We will specify the content of each of the six steps in the next posts in this series.