IMPORTANCE OF MARKET ASSESSMENT WHEN ENTERING NEW EXPORT MARKET
Why Market Assessment
Companies that have already succeeded in their own country/region and are looking to enter and grow business in a new emerging country market, see the growing demand and market potential but do not know how and where to begin. They also do not have the bandwidth to put up their own setup in that country from the start, unlike large multinationals. In such cases, the first point is to assess their business case in that country.
When expanding into a new country market, Market Assessment can make or break your success. If the company bypasses this crucial process, it will be entering a new terrain blind folded and will face multi-fold increase in its risk of failure.
A new entrant needs to assess the overseas market to work out a specific strategy & plan its entry into that market. A proper Market Assessment can reveal key factors that may impact the profitability of the product in the specific country, if pro-active measures are not taken to address key strategic points emerging from such an assessment.
What is involved in Market Assessment ?
For an industrial product like Automotive components, such a Market Assessment in a new country market should be done in 2 phases:
1. First phase is a Market Survey, which is Information that’s mainly data driven. It can be carried out through a Market Study by local professionals. This should provide information about size & growth estimates for the typical use segments, key customer information, main competitors, pricing overview and important regulations related to the product’s applications. This may take a few weeks usually.
2. Second phase is Market Insight and is equally crucial but often missed out. It involves deep diving into the market. This is a more strategic investigation and needs to be carried out by professionals well versed with local industry, who can engage key persons in buyer organisation in introductory presentation & in-depth conversation. This should provide deeper insight into where the opportunities lie, what are the challenges to overcome, who are the key decision makers & influencers, what are their problems & concerns and how do they perceive your company / offerings vis a vis competition. This can take a couple of months.
A resulting detailed business case will help in:
a. Assessing the total market as it exists right now and checking the expected volume growth in the next decade
b. Knowing the competition
c. Checking whether there is a strong unique selling proposition to serve the Indian market
d. Understanding what is the market strategy going to be like? Does the company want to serve the entire market or focus on a niche market?
e. Check if the product/technology is acceptable as it is or needs some adaptation specifically for the Indian market?
It is easier to invest time, money, and efforts in developing the market once you have the right Country-specific strategy, based on deeper insights. So, the first step for any new company wanting to enter a new Emerging Country market is to spend initial few months on Market Assessment – preferably with the support of a local expert.
Industry Case – Kia
Pondering over how KIA managed to capture the Indian Market effectively in no time, we came to know in an interview, Tae-Jin Park, Managing Director, and CEO, Kia India says, “While entering the Indian market, we conducted thorough research for two years to understand customer needs, sentiments, and industry gaps. Upon finding these needs, we focussed on four major areas, including design, connected technology, and segment-leading features.
A few live examples from Quanzen –
Client 1: When we took up market assessment in India for one of our clients (a Global Leader in Car Interior Safety Sensors), we came across the possibility of an upcoming regulatory requirement. This new regulation was to create a big potential for our customers product. We established our clients connect with the right people in various OEMs and in relevant Tier 1s. We also discovered that there was hardly any competition / substitute for our client’s product. This indicated to us that we had to move swiftly to get the first-mover advantage. With all checkboxes ticked, our client company decided to enter India. This assessment and the timely move – both have resulted in a substantial market share today.
Client 2: For another company that provides safety and thermal management for EV batteries, our Indian market assessment showed that their focus should be on the Electric 2 & 3-wheeler segment. It also showed that they should offer tailor-made India-specific solutions at optimal price points. The company could take a learned decision and create a suitable long-term India strategy. Such a studied strategy has now resulted in India being one of their key contributors to company sales.
Some other examples: On the other hand, we have also seen the other side of such Market Assessments. For 2 other foreign companies we realised that they did not have a business case to enter India. One of them found out that it was too early to bring their technology of wireless electric vehicle charging to India in 2018. They were excited with India’s EV plans but realised after the market assessment we did for them, that India was still too new to e-Mobility and hence a few years away from such a requirement. It is important to note that they got to know the correct strategic requirement right in the beginning and could take appropriate actions.
Quanzen and Market Assessment in India
Over the last 10 years, Quanzen has carried out such Market Assessment projects for numerous mid-size automotive supplier companies from Europe, USA, Japan, China, Korea & Australia. We covered various areas of Automotive like Electric vehicle powertrain, Battery thermal management, Safety sensors, ADAS hardware & software, FIM/IME interiors, light weighting, precision forged components etc.
For more details on how we can support you in Market Assessment or any other area of Market Development in India, do write to me at sudhir.nerurkar@quanzen.com
