You need to obtain a high-level view of the market. This needs to be from your perspective, not a distributor or potential agent who will have inherent bias. Think of it as a 30,000-foot flyover to understand how the market works today. This will give you an indication of your potential revenue from this market. And it will give you a sense of how the market is organized (segmented) and very importantly, because no market is static, what trends are moving it. Market trends are typically driven by technology, geopolitics, demographics, and psychographics.
You need to know what the current needs and desires of potential clients are; NOT the needs and desires they had 3 years ago when the incumbent supplier started selling to them. You need to understand the root cause of these needs - nobody wants a drill, they want a hole. Or the other famous metaphor which Henry Ford is reputed to have said, “If I had asked people what they wanted, they would have said faster horses”.
You need to find out what is currently available to serve that market. Remember that some may be ‘drill vendors’ and some may be ‘hole-providers’. Be certain to look beyond what they are selling and look at the companies involved. After all, you won’t be competing with a drill bit. You’ll be competing with the entire value chain that provides the drill bit (manufacturer, logistics, distributor, retailer, etc). Pay particular attention to their Asset Baggage(TM) as this may allow you to create an unfair advantage.
And so, with a good understanding of the above, you are now ready to think about how to enter the market.
It is never a good idea to enter a new market as a “me too” offering. Often companies enter with unsustainable differentiators such as a slightly lower price or a new cool feature. This seldom is effective as the incumbents will use their market power to underprice you and quickly replicate your cool features.
You need to find more sustainable differentiators. You can do this by reviewing your findings from the activities above. These may include:
• Is there an emerging market niche that the incumbents are ignoring (Uber, Airbnb, etc).
• Are some customers ready to buy in a different way (Tesla distribution model).
• Do they want to consume in different ways (pay for illumination, not light bulbs).
As you develop your strategy, you will also want to consider which products / services you lead with. “Why Most Exporters Fail” provides sharp advice on this.