Joint Market Assessment

Finding the right partner is the key to success in an emerging market, but equally important is making an assessment of the suitability of the product(s) to local market conditions. Before making all other preparations regarding the market entry, your company and local partner should address which products to introduce— in other words, what products are most suited to local market conditions.

Disappointing market performance in growth markets can often be tracked back to overestimated market demand or purchasing power. Therefore, the toolbox addresses the need to discuss the suitability of the product portfolio in the target market jointly with the distributor before anything else is done.

Adjusting existing products to emerging markets
Introducing existing products to emerging markets sometimes requires adjusting the sales approach, marketing material and packaging, and the degree of after-sales services and support to local expectations via the distributor. For example, for some consumer products, developing a smaller or simpler version is one way to adapt a product to better suit local purchasing power. In other cases, adjusting to local taste preferences can be key to successful market development. Discuss this openly with your distributor up front and discuss which products in your portfolio are most suitable to promote and also whether you need to adjust the sales approach. Sometimes small adjustments can be the difference between success and failure.

Developing new “mid-market” products to emerging markets
If it turns out that the market for existing high-end and expensive products is limited, discuss if a mid-market product could be jointly developed in the longer run. Developing a mid-market product typically involves stripping functionalities in the product or developing a more affordable product with a shorter life cycle. A dual-brand strategy can also be considered. The premium brand is combined with a mid-market product, jointly targeting different market segments through various sales channels and branding.

• Discuss which products are suitable to local market conditions (prices, functionalities, quality level)

• Introduce relevant products from the existing product portfolio

• Long-term strategy: Discuss how new products can be developed jointly using the two companies’ strengths

A map is often a good starting point for discussion about a market; it can help you more easily understand the country, distances, and key sales areas.

Print a map of the country and bring it to the meeting. Use the map to zoom in on the market and discuss the basic steps of the game plan. This part of the initial dialogue is meant to provide a basic knowledge about key cities/markets, which are discussed in detail subsequently.

• Use the map to discover your best geographical opportunities. Consider the location of key cities, relevant industry clusters, infrastructure, natural resources, etc.

• Which port or airport should the products be transported to? Where do we sell Year 1 and how far would we like to reach in the coming years geographically? Discuss the various factors influencing the process when starting your distribution in an emerging market.

• In some growth markets, sales are very regionally based, and it is important to understand and challenge the reach of your partner. One option is to give your partner the rights to certain areas and include a promise of performance-based expansion.

All markets are different. Sometimes the most relevant growth market segments are not the ones you assume. In the Customer Segmentation tool, you identify your new customer segment, its traits, and its characteristics with your local partner.

This tool facilitates discussion on how your product fits into the local competitive landscape. Demands and customer requests differ from country to country, and often selling points in the domestic market differentiate a lot from the market you are about to enter. Therefore, it is important to draw on your new distributor’s knowledge and, together, identify your customers.

In the Customer Segmentation tool, you and your partner will divide your new customer base into groups with similar characteristics and traits. For b2b products, these traits include types of organization, size, etc.; for b2c products, consumer groups with similar interests, habits, demographic profiles, etc., are traits you want to categorize.

• Select the products on which you and your partner will focus.

• Discuss which type of local customers would value your product. Remember to challenge your assumptions about segments and ask the distributor if other types of customers could see value in the product. Often, product use and value can be very different in growth markets.

• Discuss the basic characteristics of this group. For example, it’s important for you to know if there are ten private hospitals in the country or one hundred, or if the young urban segment is growing by 2% or 20% per year.

• Once you have a good understanding of the range of potential customers, prioritizing these is equally important. Remember to challenge your partner; understand which segments your partner is best suited to target. All markets are different. Sometimes the most relevant growth market segments are not the ones you assume. In the Customer Segmentation tool, you identify your new customer segment, its traits, and its characteristics with your local partner.

In this tool, you and your distributor walk through the distribution plan and all necessary links of trade. Identify the sales channels through which your product can be distributed and how to most efficiently organize these.
How will you bring your products to the market? In this tool, you and your partner will design the go-to-market approach. Once you have defined your segments, discuss how to best reach them and what to be aware of in the process. Examples of issues to consider include:

In which outlets would each segment typically look for this type of product or service? Are online sales prevalent?

Do some segments use tenders? How are they organized?

How many steps are there between your distributor and the customer? How much knowledge and/or control does your partner have over the value chain?

If sub-dealers are necessary, how does your partner work with them?

Decision makers and influencers
The perceived value of the product depends on who’s assessing the product. For each segment, discuss the typical decision maker or decision-making process. Is it a doctor or a manager who typically decides on which product to buy? Who influences decisions? How will sales be organized to best reach the actual decision makers?

For some sectors, it is important to understand market dynamics and relevant stakeholders in more detail. The stakeholder map can help you decide who you need to be aware of, manage, or collaborate actively with to succeed.

Mapping stakeholders is a good way to create an overview of the market and discuss how to potentially work and collaborate with governmental institutions, NGOs, companies, etc., to fully pursue the market potential.

The matrix is divided into know, manage, and collaborate, where “know” represents stakeholders that you need to monitor but not necessarily engage with, such as competitors. Stakeholders under the category “manage” are potential allies or enemies, depending on how your partner manages them. Finally, stakeholders placed under “collaborate” will be interesting for you or your partner to engage with.

• Discuss with your partner which stakeholders affect the success of your business.

• Place these on the map according to their importance.

• Discuss how you will monitor, manage, or collaborate with the stakeholders. Also discuss timing and responsibility.

The Key Purchasing Factor tool helps you understand what criteria your customers use when evaluating your product and when making a purchasing decision.

Here you will identify and understand what actually makes your customers engage with your products. How price-sensible are they? To what degree is convenience important? Are nutrition or quality important factors influencing your customers’ purchasing choices? Listen to your partner. It is very possible that factors differ considerably from your home markets.

• With your local partner, list the criteria that your customers typically consider when purchasing your type of product.

• Together, rank the importance or significance of a given factor.

• Fill out one sheet per segment or compare segments by using different colors or symbols on one sheet. This enables you to benchmark them against each other and discuss differences and where your product matches criteria best.

With this tool, you can identify costs associated with distribution in your new market and discuss price points with your partner.

Even though you have a distributor to execute this task, it is important that you understand the most important steps in the process so you can set the price right and ensure expectations are aligned on responsibility for different costs.

The distributor will have varying degrees of control of the supply chain, from distributor to end user. Walking through the stages with your partner will yield important insights, not only on how much control your partner actually has but also in what stages you can improve different factors. Furthermore, it will give you insights into how the infrastructure works.

• The vertical axis lists all the costs typically encountered when distributing in your new market such as transport, clearance, import duties, local taxes/VAT, and many others.

• The horizontal axis is where you fill in your transportation/delivery chain. It should include all the stages your product undergoes from leaving your custody until it reaches the end user.

• Discuss the distribution of costs along the value chain. Remember to discuss who will bear the costs. Import duties, etc., can be a very big expense.

• Sometimes your partner will not want to be transparent about costs and markup. Explain that you are interested in understanding cost structure and setting the price right for each other’s mutual benefit.

This tool can clarify how your competitors position themselves in the market. It will give you important knowledge of the competitive landscape and how you should position your products and solutions.

In this tool, you and your partner list possible competitors or substituting products and how they position themselves in the market. This will enable you to understand what your product is up against and how it can be efficiently positioned.

• In collaboration with your partner, identify competitors for a given segment. Sometimes the customer will benchmark a product against their traditional alternative—for example, not using technology for diagnostics in a hospital. Make sure to also include competing solutions.

• For each competitor, discuss their value proposition, price level, and approximate market share.

• Often, your partner will not have complete information. Explain that the idea is for you to get an overall feeling for the competitive landscape, not necessarily the exact details.

The Market Position tool helps you develop convincing sales arguments with your partner. Once you have a common understanding of this, you can be sure your partner will represent you to the best of their abilities and that you can support your partner with the marketing materials and training that suits the market’s needs.

The work resulting from the previous tools has provided a lot of information including who your customers are, their purchasing criteria, who your competitors are, and how they are positioned.

Based on this information, discuss with your partner the strategy and key selling points of your particular product for the different segments. These messages can help you develop marketing materials and decide on marketing channels.

Summing up on conclusions is a good way to see if your takeaways from the discussions are aligned.

The Go-to-market plan tool summarizes the conclusions drawn from your different discussions:

• Which product and service package is relevant?

• What are your unique selling points?

• Who are your target customers?

• How will you reach them?

• Which marketing and sales efforts are necessary?

The Partnership Development tools can help you make the plan practical and set specific goals and tasks.