Use This Method to Select Your Company's Target Foreign Markets

There are officially 208 recognized countries in the world, and in most of them, you could find customers for your products.

But as Michael Porter, the father of modern competitive strategy, says,“Strategy is about choosing what not to do!”.

This also applies to selecting target markets in an internationalization strategy.

The TARGET MARKETS are the ones where your company will develop focused strategies to enter and grow, investing most of its marketing and sales resources.

In all other countries, you may still do business (never miss a sales opportunity!) but with an opportunistic rather than a strategic approach..

Unless you're Apple or Coca-Cola, based on my experience, you can't have more than ten target markets.

So how do you choose target markets objectively, without relying solely on experience, gut feeling, or the opinions of your salespeople who understandably want to keep all options open?

Here are the six practical steps I recommend and follow with my clients:

1 - Set an on/off threshold (e.g., a certain level of imports for your product category) to determine which countries to consider—this will narrow the list to about 100 countries.

2 - For these 100 countries, select two or three meaningful economic and demographic indicators relevant to your business, easily accessible online—such as population, GDP, or average income—and use them to reduce the list to 50 countries.

3 - For these 50 countries, gather and evaluate data specific to your company’s sector (e.g., automotive, furniture, food & beverage), also usually available online.

4 - This will leave you with 20–25 countries. Now, collect and assess data on your specific market,which may be harder to find—e.g., sales of veterinary laser therapy equipment or spray booths for body shops.

5 - Once you’ve identified the 10–15 most objectively attractive markets, assess the competitiveness of your products/services in each: the final target markets will be those with the highest combination of attractiveness and competitiveness.

6 - Lastly, ask yourself questions related to your company’s situation for each market: “How much am I willing to invest?”, “Do we have prior experience in this market?”, “How close do we want to be to end customers?”

This process may seem long and complex, but I assure you, it will help you make more focused and sustainable choices—and you’ll understand your business and markets much better.