Consumer Insights to Consider When Entering a New Market
When a company enters a new market, it can feel a lot like being the kid that transfers into a new school mid-semester. Whether it’s for an entirely new product or an already established one expanding into new regions, the situation is often the same – you’re the new face in the classroom and, therefore, it’s up to you to determine if the new school is going to be a good, productive experience. Chances are, if you’re too passive, dismissive, or isolated, that new school will turn into a prolonged, negative ordeal that makes your stomach churn.
While new students have many things that can work in their favor – introductions to the other students on that first day, a clean slate to build a new persona – companies have traditionally been left to their own devices to make the transition into a new market as smooth and successful as possible. Organizations can’t count on a teacher holding their hand to make the experience of being new to a market as pleasant as possible.
Fortunately, times have changed quite a bit for companies over the last handful of years. Although there’s still no one to hold their hand or serve them consumer insights on a silver platter, technology can bring efficiency and effectiveness to the process that were previously unobtainable.
With the AI-based platform and insightful, transformative solutions from O360, a market entry plan can be a precise, targeted strategy built on accurate consumer insights, making expansion efforts as potent and successful as possible.
Successful Expansion Hinges on Accurate Consumer Insights
Entering a new market, even with a flawlessly executed entry plan, has never been a walk in the park. Traditionally, it's been an exhausting process that begins with a considerable amount of initial research then proceeds to product rollouts and their associated marketing campaigns to try to plant a flag in the new territory.
In the past, such a process has been extraordinarily expensive and time-consuming. In fact, with so much at stake, brands typically invest significant amounts of time and money in researching new potential markets before starting any rollouts or marketing campaigns.
That initial research is critical in determining if a particular market can ultimately produce success. If that research is flawed, inaccurate, or biased – either positively or negatively – the resulting market entry strategies could severely hamper any potential success a company might have realized through their expansion efforts.
To demonstrate the importance of accurate and insightful information to inform entry strategies, Constellation Brands – makers of Corona beer and Svedka vodka – recently invested an estimated $245 million in the rapidly expanding cannabis industry by purchasing a minority stake in Canada's Canopy Growth. The problem presented by the potential expansion, however, wasn’t so much a question of growth in the cannabis industry but how such growth might affect alcohol consumption and, therefore, Constellation’s core products.
On a conference call with analysts to discuss the matter, Rob Sands, Constellation’s CEO, stated:
"It's probably not worth getting in a big debate right now about whether it's cannibalistic or complementary. There's just not enough information to really say how that's going to affect beverage alcohol generally moving forward."
Of course, the statement exemplifies the classic predicament many companies face when expanding into new markets: they must begin making investments based on the limited information available to them as an outsider looking in. It is a process where each successive phase is dependent on the success of previous stages. With the entire process hinging upon accurate consumer insights and data, insufficient or unreliable information can sabotage expansion efforts before they realistically have a chance at finding success.
Using Constellation Brands as an example, Mr. Sands was correct in stating there wasn't enough information available at that time to determine how the two product lines would interact with one another. However, discussing that lack of knowledge only tells a portion of the overall story.
If Constellation Brands was able to better understand the cannabis industry’s consumer base as a whole, it would have the insight needed to determine whether or not they should continue to invest in Canopy Growth. In fact, if those consumer insights ultimately revealed there was enough crossover between their alcohol consumers and legalized cannabis consumers, Constellation might be able to explore potential cross promotions between the two distinct customer bases. A more informed, accurate understanding of those bases through consumer insights would allow Constellation to make better decisions about marketing their brand and products before making significant investments.
Understand the New Market Before Jumping Into the Pool
Before expanding into a new market, it is essential for companies to initially focus on the potential reaction of and impact on the new consumer base. Those consumers are, in fact, the individuals who will collectively decide a company's fate and, like when meeting new people, first impressions go a long way. Brands have one chance to make an impactful, engaging first impression that could lead to word-of-mouth and positive social influence that has become so important in today's marketplace.
Likewise, companies must thoroughly analyze the competition within a potential new market or brand category. No matter how saturated a market might be, there will always be areas of opportunity – often referred to as white space – where consumer wants and needs aren’t being fully met by available options.
For companies looking to enter that market, those gaps provide an opportunity that a brand can occupy and deliver value. It's these market gaps that initially allowed Netflix to see significant traction within a highly competitive, crowded movie rental marketplace. Netflix recognized early on that, despite a massive market of movie renters, the vast majority of companies employed the prototypical Blockbuster model rather than delivering the movies people really wanted directly to the consumers.
As the basis for their market entry strategy and rapid penetration, Netflix wanted to provide a far more convenient, cost-efficient movie rental model that didn't require consumers to make constant trips to the local Blockbuster or Hollywood Video and be subject to late fees, return deadlines, and disinterested staff. The strategy was ultimately successful and laid the foundation for the company’s meteoric rise along with the ultimate demise of the old-fashioned movie rental model.
Brands should follow the example provided by Netflix to better understand market dynamics, unmet wants and needs, and specific product features and attributes that appeal to both individual consumer segments as well as the entire marketplace. Such insights can reveal if a new product might resonate with consumers before investing substantial amounts of time and money into expansion.
These insights are critical to understanding how different customer segments feel about a product. Understanding segment perceptions allows brands to determine if a new market entry is a viable option and, if so, to develop personalized marketing and product messaging that maximize market penetration. After initial entry, those same insights can be further refined and analyzed over time to progress market development and strengthen a brand's position.
A similar mindset can be used to better leverage a product’s occasions of use, especially when attempting to capture additional market share or consumer segments. If a brand already has products that are successful within a specific occasion, exploring product innovation in different but related-use occasions could significantly expand consumption and profitability.
Aside from analyzing consumer engagement and sentiments around the specific product attributes and occasions of use, brands should also try to better understand overall affinities within the consumer segments of a potential new market. Companies should look towards successful brands with high affinity in those new markets to learn from their success, even if the brands are from an entirely different category than their own.
Creating Market share in the Competitive CPG Space
The consumer packaged goods (CPG) industry is known for its quick pace, rapidly shifting customer tastes, and significant barriers to entry for most newcomers. The simple notion of finding available shelf space with retailers can be an uphill battle when more established brands provide low risk and consistent returns for a retailer’s limited shelf space.
These barriers pose significant barriers to less established brands that might have the most innovative products in the world but lack the track record and history of older, more popular brands. Therefore, it is especially crucial for newer companies in CPG to better understand consumer insights backed by reliable research to demonstrate potential success to retailers and receive much-needed shelf space as a result.
Traditionally, CPG brands have relied on surveys and sampling techniques before a product launch to help guide their message. However, this process can be expensive and rarely provides real-time feedback based on consumer conversations and perceptions around the new product launch.
Alternatively, O360s platform provides frequent, unaided, consumer-generated feedback to a brand and, consequently, agile and spontaneous guidance to better inform a product launch. While O360s solutions are not meant to replace surveys and interviews, our platform uses machine learning to continually analyze consumer reviews and comments throughout the vast online environment. In fact, with the insights gathered from the O360 platform, a brand will be even better informed about the questions to use in those surveys and interviews to dive deeper in areas identified using O360.
After The Launch, Insights Are Just As Critical
It’s not uncommon for brands to have significant budgets for new product introductions, but frequently budgets for insights dry up after launch. However, it is just as critical that companies continue to keep a finger on the pulse of the marketplace after launch. How are consumers reacting to the new product months after launch? How are competitors responding to a new entrant to their markets?
O360 provides consumers with an ongoing view into evolving consumer perceptions of brands, competitors, products, and product categories. Companies can track their and their competitors’ brand health on an ongoing basis, respond to new trends, and adjust strategies and plans based on what is working and what is not. Where surveys, focus groups, and interviews provide insight into the marketplace at a point in time, companies using the O360 platform have ongoing insights that enable brands to continue to identify new white space and competitive opportunities to grow well beyond the new product introduction.
O360 gives brands the ability to collect feedback on a consistent basis to maintain agility and quickly adjust to the ever-evolving needs and desires of today's consumers, an especially important component of a new product launch. The powerful combination of AI-based innovation with the guidance of social influence can help steer a brand through crowded, competitive waters.
Brands that are able to quickly analyze consumer conversations and leverage those insights before, during, and after expansion into a new market hold a tremendous advantage over competitors still relying on antiquated, old-fashioned methods. In other words, O360 helps companies make the very most of their first few days as a new student at a new school.