The First Steps to Formulating the Right Market Entry Strategies

September 25, 2012. Yum! Brands, the operator of KFC, Pizza Hut and Taco Bell, seems to have beaten McDonald’s in conquering China. Today, it has over 4,000 stores compared to about 1,500 "golden arches" restaurants in the mainland. Any entry into new markets is fraught with uncertainties. There are no guaranteed winners. Take Carrefour for example. After an unsuccessful attempt to enter Brazil and its focus on the hypermarket model even as consumers buy more goods locally and online, its share prices have fallen since 2009. How can consumer and retail companies ensure that they pursue the right business models?

Pete Read, Senior Vice President of Global Strategic Analysis & Advisory and Rahul Dhingra, a Senior Consultant at M-Brain (formerly GIA) North America, explain how consumer and retail companies can use market intelligence for greater business growth.

First, how is market intelligence different from market research?

Dhingra : “The focus and scope of market research and market intelligence are different.

Simply put, market research, or consumer research as it is also known, is used to discover what consumers want, need, believe or how they are likely to act by asking consumers themselves. It might tell you who to speak to and how, in order to win more market share. As a corporate function, it is typically placed under marketing and advertising.

Market intelligence on the other hand, more commonly falls under strategic planning and business development, and focuses on the entire value chain for a specific product or service. For example, it can put the competition’s activities in context. It can tell you if your competitor is speaking to the same targets, and how they are working to take market share from you.

Having said that, market research analysis can be used in conjunction with market intelligence by integrating the drive toward strategic goals with strategic roadmaps. I have seen this take the form of marketing calendars, where key competitors’ marketing campaigns are plotted on calendars in order to determine the best time to launch a new campaign. I have also seen this take the form of war-gaming exercises, where teams imagine what the competitors are most likely planning, and how their own firm can defend against those competitive strategies.”

Read : “The methodologies used are also very different. Market research typically employs surveys – whether executed online, by phone, by mail or in person ““ as well as focus groups, in-depth interviews, home diaries, panels, ethnographic shadowing, and so on. In other words, market research focuses squarely on existing or potential customers.

In market intelligence, we can size markets using statistical modeling, conduct due diligence on new markets, review potential new business partners or acquisition targets. We will assess not only the consumer market characteristics and retail market size, but also the likely future development of the market, the positioning and strategies of key competitors, potential distribution partners, as well as the business regulatory environment.

As such, we are able to provide strategic recommendations on the addressable market, country investment prioritization, market segment prioritization, competitive positioning and pricing, market entry approach, potential distributors, and how to deal with any potential barriers.”

Table: Comparing approaches

Market intelligence vs market research_comparing approaches

How does market intelligence help in formulating the right business strategies for consumer and retail companies?

Dhingra : “We use market intelligence to help organizations understand their business environments, compete successfully in it and grow as a result. For example, beyond involving customers themselves, we look at data from company accounts, official statistics, trade bodies as well as interviews with business contacts or government officials.

Ultimately, integrating market intelligence with market research enables both a tactical and strategic perspective, which includes consumers, suppliers, competitors, economics, and other market forces.”

Can you please provide an example?

Read : “In one project for a consumer goods company, we were asked to recommend a business expansion strategy for household appliances, including optimal channels, product focus and price positioning, and the fastest route to implementing the strategy.

Needless to say, we included consumer research methodologies as part of our approach. We conducted retail visits and focus group discussions in each major market, where we explored consumer usage, attitudes, perceptions, concept reactions and brand loyalty.

In addition to that, we also conducted desk research and industry interviews. Most of our insights were derived from semi-structured interviews with industry players in our client’s target countries, including key competitors, channel players, prominent master distributors as well as industry associations and experts. Probing and elicitation techniques with industry stakeholders were highly critical to gathering insightful information.

Next, we used all the information we gathered in benchmarking and validating our final analysis and recommendations. These included reality checks, logic and consistency checks, cross-checks between sources and validating key findings with local industry observers. Ultimately, the client was able to get a much more comprehensive picture of their market challenges and were able to tailor their product offering and marketing approach much more successfully.

While traditional market research is certainly valuable to marketers, consumer and retail companies can make even better informed business decisions by employing a broader-based market intelligence approach in tandem with it. With a relatively small investment and high ROI, market intelligence that looks at the whole value chain can play an important role in capturing strategic opportunities and avoiding potential pitfalls.”

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