International marketing research

During later funding stages (series B, series C), startups tend to focus on expansion strategies. For those that have managed to establish a strong national presence, the next step might be to expand internationally.

But this transition is far from easy. When choosing to enter a new market, you will need to clarify who you want to target, and how to best approach them.

This is where research comes in. By gathering and analyzing data, you will be able to discover what steps you ended to take to enter the market successfully.

In this article, we discuss the importance of international marketing research and offer helpful tips to get started. Whether you want to expand your business or are simply curious, the following chapters will break down each and every part of the process.

Importance of international marketing research for growth startups

Many founders think that marketing is the skill of attracting an audience. While this is an important part of it, there’s much more to it than that. Great marketers can see things from multiple perspectives. They are able to stand in the customer’s shoes and understand their needs.

To do so, the marketer needs industry-specific knowledge, and familiarity with the audience they work with. Pretty straight forward so far.

However, things can get quite complex when choosing to go international. From wrongful assumptions to a lack of understanding, there are many new variables you will need to consider. Starbucks found out about this when they attempted to expand to Australia.

International marketing research is all about establishing cross-cultural communication. After all, every culture has different values, pain points, and needs. Your potential customers may be doing things in a completely different way than what you’re used to. And the only way to establish a cultural fit is by doing research.

International market research vs marketing research

Before we delve into the specifics, it’s important to make a clarification. International marketing research vs market research is often mixed up. While the two may overlap, they are inherently different:

International marketing research
  • International market research offers a broad overview of the market. We have previously written a guide on how to perform market potential analysis, so this would be a good place to start. Market research is an important backbone of marketing research and will need to be included in your report.
  • International marketing research can be seen as a subcomponent or derivative of market research. It focuses on the potential marketing-related opportunities and challenges, related to the findings of the market research and overlapping activities.

Preliminary types of international marketing research

When structuring a marketing research proposal, you will first need to understand the market you wish to enter. There are certain types of preliminary research that will help you do this on an international level. You can add these in the background of your research report:

1. Competitor market share and influence

The first thing you should explore is the existing market leaders in the country (or continent) you want to expand to. Understanding their market share in the competitive landscape is an important part of international marketing research.

How does this help?

You can observe the volatility and growth of your competitor’s market share to determine their level of influence in the market you are trying to enter.

  • If a competitor maintains a stable market share in a growing industry, he is growing his revenue at the same pace as the market’s growth. This is a good indication of up-and-comers, as well as identifying top competitors.
  • If a competitor’s growth in terms of market share exceeds the growth of the industry, it’s best to compare them with other industry-related market leaders. By doing so, you can determine how the competitive field will look like in the future.

How to get started:

To start the process, you will need to identify:

  • The timeframe you want to explore
  • The competitor(s) you want to look into
  • Your competitors’ revenue data*
  • Industry’s total revenue

*Revenue data can be retrieved from various independent sources, depending on the country and industry. This includes trade groups, regulatory bodies, or publicly available information that can be obtained from the company itself.

Once all the information is in place you can calculate the market share. Here is how the formula looks like:

Competitor’s market share = Competitor’s revenue / Industry’s revenue

For example, if the industry had $100 million in sales over the past fiscal year, and your top competitor made $30 million in the same timeframe, their market share is 30%.

2. Competitor marketing analysis

Once you identify your biggest competitors, it’s time to explore their marketing strategies.

How does this help?

Exploring how your competitors promote their products will help you better understand the audience you are trying to attract. It will also help you discover market gaps / untapped marketing opportunities that you can use to elevate your offer.

How to get started:

There are no set guidelines to do this; the simplest and easiest way to get started is to follow all their digital channels (blog, social media, newsletters, etc.). Here are some questions to ask yourself while scrolling through their content:

  • How do they position the product? Is it in any way different than the way you present your product at the moment?
  • How do they communicate with their audience through emails, blog posts, and SM platforms?
  • What is the tone of voice that the company uses to communicate with the audience? Why do they choose to do this?
  • Are there any channels where engagement is higher than usual? Why does this happen?
  • Which are the channels where the competitor is running ads and where do these ads lead in terms of the sales funnel (top, middle, bottom).
  • How does the competitor attract new customers, retain existing ones, and reactivate inactive ones?

Before you start exploring the marketing tactics of your competitor, it is important to develop a cultural filter. For this, you might need to consult a marketing expert that resides in the area you wish to explore.

3. Limitations related to culture, religion, and legal frameworks

When exploring competitors on an international level, you don’t need to limit yourself to an exact-product match, but rather a niche-match. For example, if you’re selling protein bars for mountain climbers, you could research all competitors that sell health and fitness supplements for mountain climbers. By doing so you can get more insights.

However, the product you wish to sell may also have cultural, religious, and legal limitations.

  • As we saw earlier, the Australian culture sees coffee as an experience instead of a product. This culture mismatch led to the closure of 60+ Starbucks locations on the continent.
  • A country’s health regulations may affect the ingredient mix, promotion, or labeling of your fitness supplement.
  • Certain countries have high internet censorship, which could play a big role in your promotional efforts as well.
  • There are endless possibilities, and you will need to discover the ones that are relevant to your product.

How does this help?

Understanding the background of a country will help you understand the potential limitations when it comes to marketing and communication.

How to get started:

  • Consult a native marketing professional to understand how culture and religion may affect the product-market fit.
  • Consult a native lawyer with experience in your industry and try to understand how legal frameworks could affect your offer.

International marketing research process - The proposal

Now that you have a good understanding of how to structure the background information, it’s time to create a proposal. This is a rather short document that states the following:

  • Background information (results of preliminary research, competitor analysis, etc.)
  • Problem identification (what is the challenge?)
  • Purpose statement (why are we doing this?)
  • Choosing models (what models will be used to structure and analyze the data?)
  • Choosing Research methods (What research methods will be used?)
  • Hypothesis (What do we expect to see from the results?)
  • Conclusion (Short summary of key points)

Even if you are the final decision-maker, it’s good to have a proposal before starting the actual research. The document can guide you through the process, keep you organized, and act as an SOP for the participating team members.

The final report

Once you start the execution process, you will eventually end up with a much larger report that contains all the findings of the analyzed data. The structure will look similar to the one above, with the addition of 3 chapters:

  • An abstract (short summary of the research process, findings, and advice)
  • Background information (results of preliminary research, competitor analysis, etc.)
  • Problem identification (what is the challenge?)
  • Purpose statement (why are we doing this?)
  • Choosing models (what models will be used to structure and analyze the data?)
  • Choosing Research methods (What research methods will be used?)
  • Results (Summarize the key findings of analyzed data and list the limitations)
  • Recommendations (Add your advice based on the findings)

Keep in mind that this is a research report - not a marketing report. This means that you won’t be creating any strategies at this point. Instead, you will perform a marketing opportunity analysis. By doing so, you may discover market opportunities, which will give you more direction when creating a marketing plan.

Coming back to our Starbucks example, it is easy to see that the popular brand, underestimated the market and did not try to understand its new audience. Had it been aware of the importance of international marketing research, it would’ve probably implemented a different approach.

Do it yourself vs outsourcing

Like most startup-related services, you can either choose to perform the task in-house or hire external partners to take over the process. But, when it comes to this particular type of research, what is best?

Performing research in-house

This is best done if your company has talent that is capable enough to produce reliable results.

  • In-house research is a budget-friendly solution, as the only external help you will need will be in the form of consultations.
  • It might not be the best idea for a team that is already busy with other tasks, as it takes a lot of time to set up and execute the process.
  • It is definitely not a good idea to hand this kind of task over to someone with little to no experience, e.g. an internee.

Outsourcing to agencies or research firms

Choosing to hand this task over to an external party can be risky. Working with an external research team is best for large-scale companies that have the funds but not the experience to perform international marketing research.

  • If you choose to outsource, make sure that your partner is experienced with the country you wish to expand to, and has at least some experience in your industry.
  • Do not consider the financial aspect of this type of research, and choose the best partner you can find. It is a long-term investment that can help you avoid expensive mistakes.
  • Work with a research firm - not a marketing firm.

Conclusion

In this post, we explained the importance of international marketing research for startups, by briefly explained the steps you should follow to get started. Remember that marketing research is not the only form of “investigation” you will need to do before scaling your business, but it is the one that will help you understand how to position your products.

To summarize our key points, here is what you need to remember:

  • Before delving into marketing specifics, make sure you analyze the market share of your competitors, as well as the (cultural, religious, legal, etc.) limitations that you may come across.
  • Structure a proposal before executing the process to get better direction and maintain an organized approach.
  • When writing the final report, make sure that the final recommendations are validated through the results of your research report.