How to Avoid the Most Common Pitfalls in International Market Entry

In our last article [Assumptions Companies Should Rethink], we talked about the assumptions enterprise tech firms need to consider to create a booming U.S. market entry strategy. In this article, we’ll show you how easily those assumptions can slip by, even with significant resources. 

Although necessary, financial resources are only one component of a successful market entry. According to the U.S. National Venture Capital Association (NVCA), “less than 5% of companies are successful in obtaining an income and market share during their first year, and an even smaller percentage continues its business in the United States after the year.” 

Why? Perhaps because they did not understand their customer. A product or a service is only successful when employed and accepted by the client. In this article, we’ll discuss common pitfalls businesses experience in entering the U.S. market — and how to avoid them.

What Does Coffee Have in Common with Enterprise Tech Expansion?

You may have heard about Starbucks’ unsuccessful attempt to launch in Australia in 2008. Was it because Australians don’t like coffee? No. Australia has a significant coffee culture. The local favorite is said to be a flat white — a coffee drink that marries espresso with microfoam. The emphasis on local favorites is vital here. Local, strong, simple coffee was important to the Australian coffee drinker. Starbucks brought their keynote globalized coffee shops that were fancy in form and high sugar in taste — not what the Australian coffee drinker craved or cared about. 

Even though Starbucks rerouted, it still had to close 61 locations in 2008. How could they have missed this? Their market entry strategy was askew. They came in on a globalized plan, and it didn’t work. Starbucks was charging their trademark prices for unknown coffee drinks, while the Aussies kept drinking their locally roasted espresso at local prices. Starbucks didn’t understand their client, and didn’t give Australians enough time or overlap to get acquainted with the Starbucks market. This is a mistake any business could make without market research, and a blindspot of thinking that what has worked in one place has to work in another.

The Golden Ticket is Market Analysis

Sometimes a new way of doing things works; sometimes, it doesn’t. How can an enterprise tech firm differentiate itself? By understanding the cares of their target market. It’s not that Australians didn’t care about coffee — they did. Starbucks simply didn’t leverage knowledge of their new customer base to their advantage. That is why at Kettering International, we caution our clients that what has worked in your market will not necessarily perform in the U.S. market, so research well.

The most reliable research is carried out and analyzed within the context of a target market. Certainly, someone projected how much coffee was being consumed in Australia and assumed that would correlate to sales — but it didn’t. This is another way our physical presence serves Kettering International’s clients. We aren’t guessing. We are in the marketplace you are hoping to target. We have a vetted system to run assessments and ask the right questions that avoid pitfalls and turn assumptions into true opportunities. We help you understand with greater precision what the client cares about in our discovery process.

We also can evaluate potential pitfalls by asking you, “In its current form, how do you see this expansion playing out in your business?” As a third party, we can see the comparison points between your reality and your intended market, where there is alignment and where there could be a costly gap that enthusiasm cannot cover.

Execution Over Excitement

In 2007 Baker’s Delight, extraordinarily successful in Australia, exclaimed: “Overseas expansion is an important long-term business plan, and the American market offers a lucrative opportunity to tap into a potential customer base of 300 million people.” 

They didn’t last 12 months. 

They had the capital, but they did not understand the market. This Australian company had brand recognition and the benefit of success in their home market, but they learned the hard way that curiosity does not translate to capital. 

Successful entrepreneurs who plan lucrative expansions can end up losing capital and momentum by not being methodical and practical with their market entry strategy. At Kettering, we dive into the nuts and bolts of what makes our clients successful before expansion. We look at the 20% of the business that gives rise to the 80%. Founder John Crozier-Durham explains, “We won’t give up until we have a solution for our client that makes sense.”

Kettering’s business development process asks transparent questions for the decision-makers to get into the grit of what they are seeking and what they can accomplish. It allows our clients to make tough decisions — before investing resources. We will ask what needs to happen versus what you hope or expect. We investigate what will make or break the rollout. Sometimes the rollout is delayed, revamped, or scaled back for its eventual success — dodging a loss that was waiting with hasty expansion. Delay does not mean defeat. At Kettering, we know there is a way, and we work until we find the right one.

Connect with Kettering International 

Are you interested in the real conversations that will prepare your business for the benefits of U.S. market entry? Then call Kettering International to set up a discovery call and learn how Kettering can help you succeed in international market entry.