Why is market analysis of the European market entry important before entry?

Europe Market Entry Basics

At AxiaEast, we provide the most thorough Europe market entry analysis reports available. Clients can keep and modify these analysis reports at no cost. Here's a brief overview of what we offer.

Before entering any European market, it's crucial to analyze some fundamental market components. Here, we will discuss a few that we consider most pertinent for market exploration. This list does not encompass all economic indicators, and opinions may differ among companies regarding which indicators are most important.

Macro factors

Country GDP performance and economic data

It is always very important to consider a country's GDP size and, more importantly, growth rate to determine if a market will be good to enter. GDP growth can show if a country is on the right path of economic growth, which can also mean that the buyers and consumers in this market are buying more goods and services, which generally points to economic vitality in the market. Markets with strong GDP growth indicators also mean that the government is less likely to stand behind tough regulations as they want to spur on and enhance the GDP growth in the country, also making entry a lot more attractive to investors. Lastly, GDP growth in Europe also means that industries in the economy have more disposable income to spend, which in turn means they have more funds to spend on new brands that wish to enter the market and try to experiment with new forms of revenue.

Generally speaking, over the last 5 years from 2020-2025, average GDP growth in Europe has been around 1%. The COVID pandemic, of course, played a large role in this, but a more nuanced view should be taken of Europe's differing regions. For example, GDP growth in more mature Western European markets such as the UK, Germany, and France is always substantially lower due to the overall size of the market and generally does not pass the 2% growth rate. However, Eastern European markets such as Poland, Romania, and Hungary all show strong GDP growth factors due to a number of factors, including stronger investment from the government and also stronger FDI investment.

FDI Investment

Foreign direct investment (FDI) refers to an ownership stake in a foreign company or project made by an investor, company, or government from another country. FDI is thus a key economic factor to comteplate when looking at a markets virility and willingness to open to new brands and forengn enterprises. Stronger FDI in an economy can generally mean that there are more foriegn players in the market thus meaning that more brands and enterprises are looking to this market to epxand in. Secondly stonger FDI can also mean that the changes of breaking into the market are a lot stronger due to the willingness of consumers in this market to accept new foreing enterprsises.

Interest Rates

Interest rates are also another key factor in looking at the viability of a market. To put it simply, higher interest rates mean higher costs to borrow money from the bank, while lower interest rates mean lower costs to borrow from the bank. High interest rates can often mean that companies and consumers are less willing to spend and thus less willing to invest in new ventures such as a new brand or product on the market. Lower interest rates coupled with high growth of GDP are often the perfect indicators to enter a new market at any given time. However, these parameters are often hard to come by.

Micro factors

Competitve Analysis

A full and comprehensive analysis of competitors in the industry is an extremely important factor for any industry or market. In any market, there will be competitors of different sizes and values. It is important to target the competitors who have a strong affinity with your brand and business. This is mainly done by looking at whether there are obvious crossovers between the products/services offered by you and the competitors. Analyze the value proposition they have and how it is different from yours. This could come in a number of different factors such as pricing, quality, and accessibility of the product or service.

Product & Pricing Analysis

Once the competitors in the market are clearly marked, their products/services and pricing should be analyzed. This can become complex, as certain types of companies, especially B2B companies, are not open about their pricing, and this requires further analysis to understand their pricing structure. On the contrary, B2C and SaaS companies offer direct pricing on their websites, which can be analyzed by a number of tools we use at AxiaEast. Pricing structure analysis in the market will allow you to have a clear and confident brand position in the market.

Market Regulations and Politics

Government regulation on product usage can create a lot of problems when entering a new market. As every European country has its own by-laws that are different from overarching EU laws, understanding the details of legislation in the market is key. The level of red tape that your product faces in the European market will determine how long it will take the brand to enter the market and at what cost. For the vast majority of products entering the EU market, product certificates are needed, and services also need to comply with local laws and regulations.

 

Customer Segmentation

Customer segmentation is essentially creating a list of prospective clients that you can reach out to in the long-term and short-term time periods. These customer lists will be the basic groundwork for a brand's progress in the market.

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While the above list is only a small snapshot of what AxiaEast can offer, it is important to recognize that our services encompass a wide range of solutions tailored to meet the diverse needs of businesses looking to expand into the European market. Our expertise is not limited to just a few areas; rather, we pride ourselves on providing comprehensive support that includes market analysis, strategic planning, regulatory compliance, and localized marketing strategies. By getting in touch with us for a free consultation, you open the door to a wealth of knowledge and resources that can significantly enhance your understanding of the European landscape. During this consultation, we will take the time to listen to your specific goals and challenges, allowing us to offer personalized insights and recommendations. We are committed to helping you navigate the complexities of entering new markets, ensuring that you are well-equipped to make informed decisions that align with your business objectives. Don't hesitate to reach out; we are eager to share how our expertise can facilitate your successful expansion into Europe.