Target opened 124 stores across Canada in just ten months in 2013. They’d spent two years planning and had every reason to be confident. Canada was English-speaking, geographically close, and many Canadians already knew Target from shopping trips to the U.S.
Less than two years later, Target closed all 133 Canadian stores and lost $2.1 billion.
What went wrong?
Target didn’t understand the Canadian market, despite it seeming so similar to the U.S. They entered a saturated discount retail market dominated by Walmart, Costco, and local players. Canadian customers familiar with Target’s U.S. stores found higher prices and different product selection.
The lesson? Even markets that look similar on the surface require different approaches. Most companies make Target’s mistake: they assume success translates. It doesn’t.
International market research is how you avoid joining this expensive failure club.
What Is International Market Research
International market research is the systematic process of gathering and analyzing data about foreign markets so you can make smart decisions about where to expand, how to enter, and what to change.
You’re essentially trying to understand not just what customers want, but why they want it, how they buy it, who else is selling it, and what rules you have to follow to play the game.
Good international market research answers three critical questions:
- Should you enter this market at all?
- If yes, how should you do it?
- What needs to be different from your home market approach?
8 Steps to Conduct International Market Research
1. Define Your Goals and Objectives
Most companies start with unclear goals, such as exploring international opportunities. This leads to unfocused research and wasted resources.
Here’s what your goals should look like:
Revenue expansion goals:
- Analyze market size and growth rates
- Study purchasing power and spending patterns
- Examine seasonal demand fluctuations
- Research price sensitivity in target segments
Customer retention goals:
- Map existing customers’ international operations
- Understand their local challenges and competitors
- Analyze their supply chain requirements
- Study the regulatory compliance needs affecting them
Risk diversification goals:
- Evaluate economic stability indicators
- Assess political risk and policy consistency
- Analyze currency volatility patterns
- Study market correlation with home market cycles
Before starting research, complete this sentence: “Success means achieving [specific revenue/market share/customer metric] in [specific market/region] within [timeframe] while investing no more than [amount] and reaching break-even by [date].”
2. Identify Target Markets
Most companies pick markets based on personal connections and gut feelings. This leads to expensive mistakes.
Start with a broad scan of potential markets using readily available data. Look at GDP growth rates, market size, ease of doing business rankings, and basic demographic fits. Most businesses cite economic stability and potential for economic growth as their top factor when choosing expansion markets, and for good reason.
You should create a market scoring matrix with weighted criteria relevant to your business. Include factors like market size, growth rate, competition intensity, regulatory complexity, and cultural distance from your home market. Score 10-15 potential markets and focus your detailed research on the top 3-5.
Don’t go with obvious markets just because everyone talks about them. Sometimes the best opportunities are in markets that others overlook.
3. Understand Local Culture and Consumer Behavior
Culture isn’t just about avoiding offensive advertising, though that’s important too. Cultural factors are critical for SMEs to succeed in international markets, affecting everything from product features to sales processes to customer service expectations.
Make sure to conduct ethnographic research in your target markets. This means observing how people actually behave, not just asking them what they say they want. Spend time in retail environments, observe buying patterns, and conduct focus groups with local moderators who understand cultural nuances.
4. Analyze the Competitive Landscape
Your domestic competitors might not even exist in your target market. Instead, you’ll face local competitors who know the market intimately, international players who’ve already figured out the local rules, and potentially entirely different types of competitors.
In some markets, you’ll compete against informal sector businesses that operate with completely different cost structures. In others, you’ll face state-owned enterprises with government backing. The competitive rules you know don’t apply.
Map three types of competitors:
- direct (same products, same customers)
- indirect (different products, same customer needs)
- substitute (different solutions to the same problem)
Analyze their pricing, distribution channels, marketing messages, and customer reviews. Look for gaps they’re not filling and strengths you can’t match.
5. Evaluate Legal and Regulatory Requirements
Legal violations can kill your business overnight. Every market has unique regulations covering everything from product standards to advertising claims to data privacy to employment law.
The EU’s GDPR, China’s Cybersecurity Law, and India’s Foreign Exchange Management Act are all laws you need to abide by. Violate them, and you’re out.
When conducting international market research, start by creating a regulatory compliance checklist for each target market covering product regulations, marketing restrictions, tax obligations, employment laws, and industry-specific requirements.
Remember: what’s legal in your home market might be illegal elsewhere, and vice versa.
6. Assess Market Entry Barriers and Risks
Every market has barriers to entry. Tariffs and import duties are obvious, but cultural barriers, established distribution networks, and local relationship requirements can be just as challenging.
Political risk, currency volatility, and economic instability can turn profitable markets into money pits overnight. Most SMEs in developing countries face financing challenges, which affect both your potential customers’ buying power and your own access to local capital.
Conduct a formal risk assessment covering political, economic, regulatory, competitive, and operational risks. For each risk, identify early warning indicators and develop contingency plans. Consider political risk insurance for high-risk, high-reward markets.
The goal is to understand them and plan accordingly.
7. Develop a Market Entry Strategy
Your research should point toward the optimal market entry strategy. Will you export directly, license your technology, form joint ventures, or establish local operations? Each approach has different resource requirements, risk profiles, and potential returns.
The right strategy depends on your resources, risk tolerance, and market characteristics. High-regulation markets might require local partnerships. Markets with strong intellectual property protection might favor licensing. Markets with price-sensitive consumers might demand local manufacturing.
Model three different entry strategies with realistic timelines, resource requirements, and financial projections.
Your foreign market research should validate which strategy has the highest probability of success.
8. Test, Localize, and Scale
Even with perfect international market research, your initial market entry will involve assumptions that need testing. Smart companies start small, test their assumptions, and scale what works while quickly pivoting away from what doesn’t.
This is where marketing translation becomes crucial. Your research might tell you what to communicate, but professional localization ensures you communicate it effectively.
It’s a good idea to design your initial market entry as a series of experiments with measurable outcomes. Test different price points, distribution channels, marketing messages, and product configurations. Use local partners who can provide real-time market feedback and course corrections.
Plan to iterate quickly based on market response rather than sticking rigidly to your original plan.
Ready to Turn Research into Results?
International market research isn’t just about avoiding mistakes. It’s about identifying opportunities that others miss.
The difference between international expansion success and failure often comes down to one factor: how well you understand your target markets before you invest serious money in them.
But that’s not all.
Markets change. Consumer preferences evolve. New competitors emerge. Regulations shift. The companies that succeed internationally are the ones that maintain their market intelligence and adapt accordingly.
Your research tells you where to start, but your ongoing market intelligence tells you how to succeed long-term.
The most expensive research mistake? Thinking you can skip it entirely. The second most expensive? Doing it once and assuming it stays valid forever.
At EC Innovations, we’ve helped hundreds of companies navigate international expansion successfully. Our expertise in translation services and market localization means your research translates into market-ready strategies that actually work.
Ready to turn your global ambitions into market reality? Contact us today and let’s build your international market research strategy.
