What is a good market entry approach?
Entering Latin America, the fourth largest market after the U.S., Europe, and China, presents huge opportunities as well as risks.
It is important to begin by considering the following:
- Your overall objectives – e.g. market penetration, sales, improved margins
- Your target customers – i.e. who are they and how many are there?
- How your goals will be met — i.e. what is your plan? – what will you do, and how will you do it?
- The need for outside help — e.g. do you have a local partner, a consulting firm, a bank, or a market research company that is familiar with that market?
Even if you are used to doing business in your own country or a market that is essentially similar to your own, it is always difficult to enter a new market or region. But when entering another continent or part of one, an additional set of problems will likely arise.
How much do you know, and what else do you need to know, about Latin America?
Here are some ideas to think about, address, and answer as best as possible prior to entering the Latin American market.
- Countries – in the map, starting with Mexico and going south and east, Wikipedia counts 26 countries, or dependent territories, from Argentina to Venezuela. Which one(s) offer you the best chance of accomplishing your objectives?
- Languages – Portuguese is the official of Brazil, whose population accounts for a third of the population of Latin America; Spanish is spoken just about everywhere, and French is used in several islands. What is the impact of having to create marketing messages in one or more languages?
- Population/size of market –Are you planning to begin with the largest market, start with a smaller one on a trial basis, or enter the entire region?
- Political/economic situation – Is it a safe place to do business? In other words, how stable are the government and economy? How well does your company know and understand the various laws, regulations, policies, tariffs, and duties?
- Cultures – with so many countries, there will be much cultural diversity that can impact the acceptance of your messaging and perception of your product or service.
- Infrastructure – whether you set up your own manufacturing or not, how will goods be distributed? There are several mountain ranges, jungles and rivers that may further impact these decisions.
- Employment/ Per capita income – whether you need to employ local people or not, it is useful to know the first statistic; and in planning potential sales, it is important to know how much disposable income people have.
- Climates – since the northern parts of Latin America are close to the equator and extremely hot while temperatures at the southern tip often fall below freezing, weather may have a significant impact on clothing, beverages, vehicles and many other products. Also it is worth remembering that the seasons in the southern hemisphere are the reverse of those in the northern hemisphere (e.g. U.S. and Europe).
- Foreign exchange and Currency issues – even though some of the currencies used in Latin America have the same name (e.g. peso, dollar), their values in US dollars or Euros will vary, requiring extra attention to production costs, pricing, and net profits in this market.
Do your research
Although entering any new domestic market has its challenges and hurdles to examine and overcome, a new country or countries presents a set of unique situations. It is wise to approach such expansions with the help of a company that is impartial, objective and able to advise and guide you through the market entry process.
At some point, you should do some market research to test your messaging and meaning in each language, and determine the potential acceptance, need and purchase intent of your product.
- SIS Market Research can thus help you in
- scoping the market
- determining if there is any need for your product
- identifying competitors, their messages and prices
- estimating potential sales
- identifying potential problems prior to a full entry
- making more informed decisions
SIS International Research helps you to identify market research suppliers that have international experience. We can help with secondary research as well with the execution of online surveys, interviews or focus groups.