Initiating Sales in New Markets (PART 1): Mapping the Local Ecosystem

After dedicating several Expansion Insights posts to the variety of market entry strategies available to businesses wishing to establish a business presence in new international markets, we will dedicate the next series of posts to the ultimate objective of international expansion: generating new sales.

Specifically, and to keep the discussion focused, this series will concentrate on the steps required for expanding companies to achieve the all-important initial sale that invariably provides the foundation for follow-on sales. We will also focus on complex international markets, such as the ones present in Latin America. The discussion will be divided in four parts: (i) mapping the local ecosystem (ii) socialization and cultural considerations (iii) product/service and sales team readiness, and (iv) sales planning and closing.

Importance of Mapping the Local Ecosystem (figuring out who is who)

While seemingly obvious, many new market entrants overlook the importance of getting to know the main players -- essentially, who is who -- in their target markets. A business simply can't begin to address a new market of any kind -- let alone dynamic markets in Latin America -- without knowing the local ecosystem. That term -- "ecosystem" -- is key because new markets are in fact living, dynamic, and constantly evolving business communities full of a variety of inter-related players. Unless a new market entrant takes the time to carefully study a potential new market, determine who are potential customers, competitors, enablers, etc., its expansion initiatives will almost surely fail. (For examples of major expansion failures that suffered from poor knowledge of local markets, see Home Depot's Failed Chilean Experiment and Target's Canadian difficulties)

Elements of a Good Ecosystem Map

Any good business ecosystem map must be tailor-made to a specific market, company, and product and/or service, but our experience assisting expanding companies identify the main players in their relevant market suggests they must all share the following qualities:

• Objective and rigorous study - A good ecosystem map requires rigorous study and research of a local market. The research can be based on existing or new business databases and other primary sources but, to ensure accuracy, should always be conducted by an objective team that has the ability to understand and convey the intricacies of a particular local market.

• Useful visual tool -- A business ecosystem map -- like any business map -- should be well designed and diagrammed so that it conveys important information to decision makers about the type of players that exist and how they relate to one another. As we covered in The Power of Good Business Maps, a well-designed map should convey sufficient information to permit the viewer to understand the significance of the data being conveyed and even draw conclusions about where and how they may interact in the market.

• Focus on customer touch-points and player categories - While it is usually not feasible to identify every single competitor, distributor or other relevant market participant by name, a good ecosystem map will, at minimum, determine the types of customers that would typically buy the to-be-introduced product or service, what type of companies they buy from, and how they buy them (directly, via channels, online, etc.). Similarly, the ecosystem map must accurately portray important player categories. For example, if a product is typically purchased by the government, it is of little value to simply list the largest distributors in a market when, as the case may be, they do not typically sell to government accounts. Instead, on the basis of research, the ecosystem map should identify specialized government vendors and channels.

• Accurately dimension the size of players - Having said that a local ecosystem map cannot hope to list all players in a market, if certain players dominate the market for the new product and service being introduced, they should be appropriately highlighted.

• Suggest possible roles and routes to entry -- As mentioned above, a good business map should allow the viewer to discern how it might begin to relate to various categories of existing players. When our clients come away from viewing an ecosystem map with good questions about their potential go-to-market strategy and even hypotheses that they wish to investigate further, we know we have succeeded.

Part 2 of the series on Initiating Sales in New Markets will discuss the importance of socializing the new entrant's products or services with the right people and in the right manner as a precursor to more formal sales activity.

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Juan Pablo Navas is a founding partner of Nextant, currently co-leads Nextant’s Consulting practice. He has ample experience leading consulting and development projects in different industries and geographies. During his tenure at Nextant, Juan Pablo has led over 100 projects related to expansion and optimization strategies, organization, sales and marketing models, customer services and business transformation.

Email Juan Pablo at: jpnavas@nextant.com

Andres Snaider is a founding partner of Nextant, a consulting firm specializing in assisting companies expand their businesses in international markets, with a strong focus on Latin America. With a degree in law and experience working as an international attorney and businessman, Andres has advised clients on a range of commercial matters and investments in almost every country in the Americas, including the US, Mexico, Colombia, Brazil, Ecuador, Argentina, Chile, and Canada, just to name a few. He is a graduate of the Harvard Law School and currently lives and works in Boulder, Colorado.

Email Andres at asnaider@nextant.com

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Nextant has extensive experience in assisting leading clients through its Market Expansion and Business Optimization services. For more information on how Nextant can assist your company in socializing a market entry and initiating sales, please visit our website at http://www.nextant.com

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