Is local knowledge the key to a successful business?

When setting up a business in any part of the world there are many things to think about, location, start-up costs and target demographic to name a few. But if you have an innovative product and the right business plan in place then would it still be useful to study local behaviour?

The short answer is yes. Whether or not you have an amazing product and tonnes of money it is no use if the people you are selling to will not buy your product. This could happen for a number of reasons but by simply doing your homework this can all be avoided.

What to look for in the local market

Competitors – When studying the local landscape it is important to note who your competitors are and what they are offering. Establish how your competitors have built their client base and how they have priced their products. When assessing a competitor it is key to evaluate their business and see how yours matches up with them.

Geographical location – Local economy is a tool that should be monitored when deciding on a pricing strategy, by assessing the local income and pricing accordingly. Also when choosing a location, cultural factors must be taken into consideration. Each individual culture is very different for example; if an alcohol company was to start distribution in Europe it would more than likely thrive, as oppose to the same company distributing in the UAE due to the fact that the consumption of alcohol is frowned upon in certain eastern cultures. Being culturally sensitive is important for any brand or company as failure to do so can result in alienation of the target market.

Political and Legal factors – Entering into any market will require an evaluation of the political and legal landscape. Whether it is regulations needed to open a store or the legal requirements for employing staff. It is essential to adhere to law and keep vigilant of any political changes.

How to ensure you are successful in a new locality

Product / Service adaptation – Cultural preference is the key to success in an international market. A lot the time a product will not work in a market due to it being too standardised. There are many examples of this, a particular high profile example of this is Pret A Manger’s entrance and quick departure in the Japanese market its attempt to infiltrate the market,  lasted only 18 months before having to pull out. Another high profile example is Tesco pulling out of the American market after making no profit.

Adaptation of marketing activities – Adapting marketing communications methods is essential as each culture communicates differently has different social norms. Culture affects how people perceive communications and factors like symbols and colours etc and so advertising and promotions must be sensitive to local norms to be effective in a positive way.

Reinventing your brand – Dependent on culture your brand recognition may be perceived as good in one country but in another it may be perceived as bad. Reinventing and re-branding a product can rejuvenate your product and allow a new target audience to see your brand in a different light.

Target a new demographic – What could be perceived to be youthful and vibrant in one market may be seen as mature in another market. Researching specific markets is fundamental to the success of a company. Sometimes a shift in the target market can help a business become more profitable.

As we can see Local knowledge and market research can increase a business and help to maintain a high level of success. Even big companies have it got wrong on occasion, so make sure that when contemplating entry into a new area you study and research the locality first.