Market intelligence research requires more than identifying where demand appears strongest. Considering other factors like trends or competitor landscape to help companies holistically plan their foreign market entry strategies based on their business goals. A first entry into the global market might prioritize test markets with similar product-market fit to the domestic market, but those with established presence globally likely have resources for localization and might prioritize emerging markets for their untapped potential.  

Foreign market entry strategies 

A holistic international market selection process starts more broadly by looking at macro statistics, before considering individual market characteristics (competitor landscape, consumer needs), and then narrowing down into business-specific needs within the market through on the ground-validation. 

1. Screening a broad list of potential markets based on their market attractiveness  
2. Conducting more detailed market analysis of shortlisted countries based on market demand and product-market fit to identify whitespace 
3. Analysing competitor landscape for assessing opportunities for differentiation 
4. Reviewing regulatory and entry requirements to determine entry pathways 
5. Operational requirements for business and store setups
6. Breaking down of cost structures to estimate expected ROI 

While AI can support international market selection by synthesizing secondary research, comprehensive business market research requires the use of primary research for local market validation, verification of commercial realities (especially for regulations) and capturing of local nuances.  

Market Attractiveness  

Market attractiveness considers not just market size and past CAGR but also: 

  • Expected future growth  
  • Macroeconomic conditions  
  • Relevant demographic or social trends  

For example, a rapidly growing market may appear attractive, but a smaller yet more mature market might have a stronger purchasing may provide better commercial potential. For example, while Singapore’s market is small, consumers have stronger purchasing power, which makes it ideal for products in the mid-premium price range. Further, its geographic location, ease of accessibility and business-friendly environment also helps function as a good launchpad for businesses if they are looking to further expand into the region. Secondary market research through existing industry reports, government statistics and trade databases can help businesses build an initial picture of market conditions. For companies evaluating several countries, these indicators can also be incorporated into an international market selection model, allowing markets to be compared using consistent criteria. 

Market Demand and Customer Fit  

A market may be attractive at an industry level while offering limited opportunity for a particular product or service.  

Demand assessment may examine:  

  • Size of the addressable customer base  
  • Current product or service usage  
  • Customer needs and unmet needs  
  • Purchasing frequency  
  • Willingness to pay  
  • Decision-making criteria and barriers to adoption  
  • Target market segmentation can help companies identify whitespace in the market. Depending on the business, segments may be defined by demographics, income, geography, industry, behavior, or needs. 

International market entry strategies should also consider local nuances like purchasing habits, cultural practices, or preferred sales channels. For example, consumers in countries like Indonesia and Malaysia might have stronger preference for products with halal certification. Effective market entry research combines market research reports with insights via interviews with industry experts and focus group discussions for a more realistic understanding of product-market fit.  

Competitor Landscape 

A market with strong demand may still be difficult to enter if it is already dominated by well-established competitors. Conversely, a market with relatively few competitors may indicate an attractive opportunity.  

Key areas to consider include: 

  • Major local and international competitors and their brand share 
  • Product and service positioning 
  • Pricing 
  • Competitive advantages  
  • Gaps in existing offerings 

Established players may have stronger relationships, lower operating costs, or greater brand recognition. However, the objective is not necessarily to find a market with little competition. Instead, competitors’ analysis helps identify whether there is an opportunity to differentiate their offering and establish a sustainable position.  

Regulatory and Market Entry Requirements  

Depending on the industry, requirements typically fall into 3 buckets:  

  • Market Entry-Related Approvals such as business registration, foreign or local ownership requirements 
  • Product Compliance such as product certification or licensing, and import restrictions  
  • Other obligations such as customs and duties, employment regulations etc 

Some markets may also require companies to operate through a local distributor, partner, or joint venture. Understanding requirements early helps businesses compare different international strategies for entering foreign markets such as through acquisitions and investments, partnerships, distributors or their own local entity. For industries like pharmaceuticals or cosmetics, there are stricter regulatory oversight, and new entrants would have to consider extra steps like applications for a Marketing Authorization Holder (MAH) or postmarketing surveillance. As such, those who are new to the market might prefer to work with an established local partner.  

Operational Feasibility  

Operational feasibility assesses whether the company can develop capabilities to operate successfully in the target market. 

Areas to evaluate include: 

  • Availability of distributors or channel partners  
  • Supply chain requirements 
  • Logistics and transportation  
  • Warehousing  
  • Local staffing  
  • Customer service  
  • Technology requirements  
  • Product localization  
  • Marketing and sales capabilities 

A consumer goods company may identify strong customer demand but struggle to access key retail channels. Similarly, companies providing heavy equipment or business-support services may find that local after-sales service is essential, requiring investment in technical teams or local partners. Companies should therefore consider operational requirements alongside market attractiveness as part of new market entry.  

Investment Requirements and ROI  

Feasibility studies also assess business cost structures as part of market research insights. 

Potential costs may include:  

  • Cost of Goods and Product adaptation  
  • Regulatory approvals, especially for Pharmaceuticals 
  • Local Office Setup: Office Rental, Recruitment  
  • Store Setup 
  • Distributor or Local Partner Margins 
  • Marketing Budget  

Local market conditions may affect returns and impact country selection. For example, markets with well-developed infrastructure and have higher purchasing power could appear to have higher revenue potential but could also present the highest operational cost. On the other hand, markets with lower costs due to cheaper staffing costs, lower rents and lower margins for local partners may provide better ROI. 

AI Use in Market Selection 

The use of generative AI is useful for hypothesis creation or pattern identification and synthesis of information from already available databases or information sources. Companies might use AI as a first step to list up a long list of potential markets based on macroeconomic statistics online, or to more broadly study products, prices or competitor information. 

Since AI use is limited to information that is already available, market research complements its use by collecting firsthand data such as store visits, in-depth interviews with potential partners or surveys with consumers. Based on companies’ foreign market entry goals, research items and discussion guides can be tailored to fit business needs, enabling unique insight generation. For operational requirements, on-the-ground validation through speaking to players in the value chain in the ecosystem also helps reduce financial and operational risks, especially for those in niche industries or in less established market segments. Additionally, market validation helps improve market fit by checking messaging, pricing and features or by capturing available gaps and opportunities in the market. A study by Columbia Business School noted that since gen AI models are trained on existing data, it is still unclear how good gen AI models are at predicting changes in consumer behaviour or anticipating product innovations.