Market Entry Plan: 5 Key Research Areas to Succeed in Foreign Markets
Expanding into foreign markets presents exciting opportunities for businesses to accelerate revenue growth, increase brand recognition, and access untapped customer segments. In today’s globalized economy, entering foreign markets is no longer a luxury reserved for large multinationals, it’s a strategic imperative for growth-oriented companies of all sizes. In fact, a McKinsey & Company report revealed that companies that entered foreign markets or expanded internationally generated 1.9 percentage points more in annual shareholder return than companies that stayed only in their home country.
However, the path to global expansion is complex. Companies must navigate unfamiliar regulations, different customer expectations, infrastructure challenges, and intense competition. To succeed, organizations need more than ambition - they need a clear, research-based market entry strategy. The most effective strategies for entering foreign markets are grounded in detailed analysis and operational planning.
In this article, we explore five essential research areas that should guide your market entry plan. From defining your objectives and understanding consumer behavior to analyzing competitive landscapes, assessing infrastructure, and building local partnerships, these pillars form the foundation of sustainable and profitable international expansion.
Set Clear Market Expansion Goals
Define Your Expansion Objectives
Establishing clear goals is the foundation of any market entry strategy. Without clearly defined objectives, even the most detailed plans may lose direction. A business may have several motivations for expanding internationally: increasing revenue streams, reducing dependency on a saturated domestic market, gaining a competitive edge, or taking advantage of lower operational costs in other regions.
For instance, a company looking to increase sales may target high-growth economies in Southeast Asia or Latin America, whereas one aiming to reduce production costs might focus on markets with favorable labor and tax conditions.
Decide on Short-Term vs. Long-Term Goals
The distinction between short-term and long-term goals is also critical. A company conducting a short-term market test may opt for low-investment methods like direct exporting or e-commerce. In contrast, a business looking to establish a long-term footprint might explore options like forming joint ventures, setting up subsidiaries, or acquiring local companies. These timelines will shape not only the entry model but also the risk tolerance and resource allocation strategies.
Assess Internal Readiness
Before expanding into a new market, businesses must critically evaluate their internal capacity to support international growth. This includes aligning leadership on strategic goals, ensuring financial stability, and confirming that operations can scale effectively. Without a clear roadmap and internal coordination, even well-researched market entries can falter due to lack of preparedness.
Product and team readiness are equally important. Companies should assess whether their offerings meet local market needs and whether their teams are equipped to handle cross-border complexities. This may involve adapting products, training staff, or strengthening internal systems to manage new compliance, logistics, and communication demands. Solid internal foundations set the stage for a successful global launch.
Understand Market Demand and Customer Behavior
Evaluate Market Size and Trends
A comprehensive understanding of market demand is the foundation of any effective market entry strategy. This involves not only estimating the current and projected market size, but also identifying the underlying drivers of demand, be they technological shifts, demographic trends, or regulatory changes.
For example, the rapid acceleration of digital commerce has fundamentally reshaped buying behavior worldwide. According to Morgan Stanley, global e-commerce penetration has increased from 15% of total retail sales in 2019 to over 22% in 2022, and is forecasted to reach 27% by 2026, presenting substantial opportunities in sectors such as logistics, digital payments, and cross-border retail.
Explore Local Customer Needs and Preferences
Consumer needs and preferences are heavily influenced by culture, income levels, and other local circumstances. What appeals in one country may fall flat in another. For instance, while German consumers may prioritize energy efficiency and build quality, buyers in India or Indonesia may be more price-sensitive but increasingly drawn to digital convenience and brand status.
Before finalizing product-market fit, companies should examine how consumer values align with their brand proposition. Questions worth asking include: Do customers expect foreign brands to offer premium experiences? Are local consumers loyal to domestic providers? Is sustainability a core purchase driver? These considerations help refine product features, messaging, and overall market positioning.
Understand Purchasing Behaviors and Decision-Making Factors
Understanding how customers make purchasing decisions allows companies to optimize their market entry strategy. In Japan, for example, the decision-making process is typically deliberate and trust-based, often requiring extensive pre-sale communication. In contrast, younger consumers in Brazil or Thailand may make impulse decisions based on social media trends or influencer recommendations.
Companies must analyze factors such as preferred touchpoints (e.g., online platforms, retail stores, direct sales), payment behavior (e.g., cash-heavy vs. digital-first), and the importance of after-sales service. These insights can inform the selection of distribution partners, promotional channels, and pricing models, ensuring alignment with consumer behavior in each market.
Use Primary and Secondary Research Methods
Developing accurate consumer insights requires a blend of primary research, such as surveys, product testing, and ethnographic studies, and secondary research from reliable sources, including government databases, market intelligence providers, and academic journals.
Primary research helps uncover behavioral drivers in specific markets that are uniquely relevant for your company, while secondary data provide industry benchmarks and comparative trends. Together, they enable organizations to confidently tailor their strategies for entering foreign markets.
Analyze the Competitive and Regulatory Landscape
Map Local and International Competitors
When developing strategies for entering foreign markets, a thorough competitive landscape assessment helps determine whether the market is saturated or open to new entrants. Start by identifying both domestic incumbents and international players active in the region. Key aspects to evaluate include their market share, customer base, product positioning, pricing, brand recognition, and marketing tactics.
Use a mix of digital analytics tools for insights on aspects such as web traffic and social media, as well as industry reports and local trade publications. This will help uncover direct and indirect competitors, including niche players that may not appear in traditional rankings, but hold influence in specific customer segments.
In highly developed markets like Japan or Germany, multinationals often compete with well-entrenched local brands that have deep-rooted cultural appeal. In emerging economies, competition may be more fragmented, offering new entrants room to differentiate through innovation, digital integration, or superior customer service.
Assess Entry Barriers
Barriers to entry, both structural and regulatory, can significantly affect the viability of a market. These may include capital-intensive infrastructure requirements, tight government control over foreign investments, monopolistic tendencies, or loyalty to domestic suppliers.
For example, Japan’s distribution networks have historically favored long-standing relationships and in-group affiliations (keiretsu), making it difficult for new foreign entrants to secure shelf space or distribution rights. Meanwhile, countries like Brazil and India may impose high tariffs or complex approval procedures for imports, delaying time to market.
Recognizing these entry barriers helps companies determine the right mode of entry, whether to establish wholly owned subsidiaries, pursue joint ventures, or partner with a trusted local entity.
Understand Pricing Strategies and Customer Expectations
Pricing is a delicate strategic lever. New entrants must align their pricing not only with cost structures and profit goals but also with local purchasing power and customer perceptions. A product that is positioned as affordable in North America might be perceived as premium in Southeast Asia, and vice versa.
In competitive markets, underpricing can erode value perception, while overpricing can deter adoption, especially if existing players already offer comparable alternatives. Pricing intelligence tools like Price2Spy or Intelligence Node can help monitor local pricing fluctuations in real time.
Consider also the psychology behind pricing: in value-driven cultures, price promotions and bundling can drive traction, whereas prestige-driven markets may view higher prices as indicators of superior quality. Understanding these nuances is essential to avoid missteps and accelerate product acceptance.
Research Legal, Compliance, and Tax Issues
Regulatory compliance requires careful attention. From data protection laws to labor standards and product related regulations, legal frameworks differ significantly across countries. For example, companies expanding into the European Union must ensure compliance with GDPR. Companies should consult local legal experts to better understand licensing requirements, import/export controls, and tax regulations specific to their industry.
Evaluate Infrastructure and Access to Local Talent
Assess Logistics and Supply Chain Availability
Operational success hinges on reliable infrastructure and availability of skilled labor in the target market. Businesses must assess logistical capabilities, including transportation networks, shipping reliability, warehouse capacity, and supplier availability. Delays or inefficiencies in these areas can lead to higher costs and dissatisfied customers.
Evaluate Digital and Physical Infrastructure
Markets with robust digital infrastructure, high-speed internet, widespread mobile usage, and digital payment adoption, provide a more accessible environment for tech-based services and customer engagement. According to DataReportal’s 2024 report, over 66% of the global population uses the internet, and mobile connectivity continues to rise rapidly in emerging economies. These trends are especially relevant for companies entering foreign markets through e-commerce or digital platforms.
At the same time, physical infrastructure remains critical. Access to reliable electricity, modern office or retail spaces, and road connectivity can significantly influence operational costs and efficiency. Urban centers typically offer better infrastructure but come with higher overhead, while secondary cities may provide cost advantages but require trade-offs in accessibility.
Analyze Access to Skilled Labor
Human capital should not be underestimated. Before entering a market, companies must understand the availability and quality of skilled labor. Key considerations include education levels, technical capabilities, local language fluency, and cultural fit. It's also essential to factor in local labor laws, minimum wage requirements, and obligations regarding employee benefits. Some regions have rigid employment regulations or strong labor unions that affect flexibility in hiring or restructuring.
Validate Local Operational Costs
Operational costs such as real estate prices, utility rates, taxes, and marketing expenditures vary greatly across cities and regions. Benchmarking these costs across multiple locations within a country helps determine the optimal entry point. Businesses should also anticipate hidden costs, such as government fees, compliance expenses, or costs related to cultural adaptation, including product localization and customer support.
Build Local Relationships and Identify Strategic Partners
Understand Business Culture and Trust-Building
In many markets, business relationships are built slowly, based on mutual trust, rather than quick transactional value. Understanding the target country's business culture is vital to developing long-term partnerships. Frameworks like Hofstede’s cultural dimensions provide a foundation for analyzing factors such as power distance, individualism vs. collectivism, and risk tolerance, all of which influence how deals are negotiated and decisions are made.
Connect with Key Stakeholders
Establishing relationships with key stakeholders, including government agencies, local chambers of commerce, trade councils, and regulatory bodies, is an essential early step. These connections offer access to insider knowledge, investment incentives, and potential partnerships. In some countries, government endorsements or introductions can lend significant credibility and ease bureaucratic processes.
Explore Local Business Networks and Events
Attending industry events, trade shows, and startup expos allows businesses to gain local visibility, gather competitive intelligence, and build rapport with potential customers and collaborators. These gatherings are often where valuable conversations take place, providing early feedback, pilot opportunities, and insight into regional trends.
Companies expanding into Japan, for instance, can learn from the example of Google’s Japanese Market Entry Strategy, where local partnerships helped foster early traction and community engagement.
Validate and Vet Potential Partners
Not all partners are equally beneficial. Before formalizing collaborations, companies should conduct due diligence on prospective partners, assessing their financial health, operational capacity, market reputation, and legal compliance. This process includes reviewing past client relationships, examining public records, and confirming business licenses.
Conclusion
Entering foreign markets is a high-stakes endeavor requiring careful planning and research. From understanding the target market and consumer behavior, to establishing local relationships, each step contributes to a well-rounded market entry plan.
Fortunately, technology can simplify much of the complexity. GlobalDeal Automation is an AI-powered platform that can conduct necessary research, craft a go-to market strategy, and connect with key persons. This empowers even small businesses with no prior experience and limited resources to expand their business across borders. By automating critical tasks involved in foreign market entry, GlobalDeal accelerates your entry process, so you can focus on growth.
Try the tool for free to see how your business could benefit from it. For areas requiring a human touch, like marketing strategy and digital product development, we also offer consultation. Contact us to discuss collaboration opportunities.