Entering new international markets is always challenging, and small markets are no exception. However, these challenges can be overcome with the right approach, offering businesses a chance to reap the benefits that smaller markets have to offer. Begin by figuring out the key challenges of your target market and work your way from there.
Identifying common small market challenges
Three primary challenges present themselves to all businesses looking to penetrate small markets:
- Cultural and language barriers—Different regions, often even within a single country, have different cultures which greatly affects how you do business in that market. An obvious example is trying to crack a small Middle Eastern market as an alcohol business. The two don’t mix due to the culture. Language barriers also present problems and make communication harder.
- Regulatory and legal hurdles—Before entering smaller markets, you must jump through numerous legal hoops to ensure you play by the right rules.
- Infrastructure and logistical issues—Small markets may have inadequate transportation networks, which can make shipping goods around the area challenging. They could also have below-par or outdated telecommunications networks; many small markets may not have fibre internet, which can impact productivity.
Strategies for overcoming challenges in small markets
Developing an excellent small market entry strategy is the secret to overcoming these challenges. This can be done by adopting the following approaches:
- Build local partnerships and networks – Collaborate with local small businesses and people within these small markets to establish a network of contacts. This helps you promote your brand while taking cultural differences into account. Local partners can also help you bridge the communication gap.
- Invest in local talent and training—Investing in local talent can help overcome two key small market challenges. You work with people who know the culture and can speak the language, but you also deal with some of the infrastructure issues. Train people and invest in the local infrastructure to help you do business more successfully.
- Adapt marketing and sales strategies—This will prevent mistakes and actions that go against regulatory requirements in this small market or offend the local population. Make adjustments depending on the market you’re in and research to see what this market responds to best. This might mean switching to more traditional marketing methods rather than relying on digital marketing and social media.
Many more strategies exist, though these three tackle the core small market challenges and help your business penetrate the scene.
Examples of successful small market penetration
We can call upon many examples of successful small market penetration from prominent companies worldwide. One of the most relevant and obvious is Tesla’s domination of the Norwegian automobile market. It’s one of the smallest markets for automobiles in the world. Yet, Tesla penetrated it by leveraging government policies aimed at electric vehicles and investing in the infrastructure by building a Supercharger network. It now owns 20% of the market!
A key lesson from this experience is how feasible it is to penetrate a small market. You can often create a demand for your products within small markets. Tesla’s massive investment in EV infrastructure was the key driving force behind its success in Norway, making its products more usable for the public. Keep this in mind – and also consider looking at government policies and schemes in small markets to see if any might help you set up shop.
Conclusion
Small market challenges will always exist, but there are plenty of tried and tested tactics to overcome them. It involves getting to know the small market and working with local partners and influencers. Understand the culture, find ways around the language barriers and invest in the local markets to find a place for your company.
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