Top tips for entering the UK market
1) Know the market and competition – Before committing serious resources to the UK market it is essential to have certainty about market entry points, market opportunities, pricing and levels of competition. You can do a lot of desk research yourself but when it comes to more detailed information, you should consider using market experts. which translates into your competitive advantage and determines where and how to market to your target audience. Your potential customers or distributors are unlikely to do this work for you so you need to be informed before approaching your potential customers. This can save you a lot of time and money.
2) Find and select the right market niche(s) – This is very important. Don’t assume that because you have success with certain products in your home market that this translates ‘like for like’ into the UK market. Try and identify the softer target markets first and concentrate on giving them a good push, rather than wanting to be “everything for everybody”. As you are starting from scratch in the UK market, it will be easier to make a name for yourself by focusing on specific market opportunities and develop clear and differentiated marketing messages to address those.
3) Know the right people – This is very simple but effective. Do you or do any of your contacts have contact with UK businesses? It doesn’t matter if they operate in your target markets but your contacts probably have other contacts that you can benefit from. The most powerful sell of all is that of a personal recommendation so to look into your contact database and ask good contacts of yours to do the same could be very rewarding.
4) Get external support from specialists in the UK – You can walk it alone but you are more likely to succeed if you accept help from the outside whether on a local, national or international level.
5) There is more to the UK than London – If you offer financial services or are a digital company, the high cost of setting up in London might be warranted. If you are not part of the above groups make sure you know where the most cost effective place is for setting up in the UK. The UK has a number of important business centres outside of London with focus on different market sectors such as the West Midlands, the North West or South East.
6) Take the UK market seriously – The UK market is big and competitive but also receptive to new suppliers. Undoubtedly the UK market has a lot of potential for foreign owned companies. However, because the UK is an open market doesn’t mean it should be taken too lightly. If your business plan doesn’t support your expansion and you haven’t assigned a budget for UK market expansion then you should think twice if the UK market is right for you.
7) If you are unsure do a market test – If you are unsure about investing in the UK and your market research isn’t conclusive, a market test in a limited geographic area can be a good option for you instead of targeting the whole UK. This is cheaper and you will find out quicker if you are likely to succeed or not.
8) Existing customers in the UK can help you get credibility quickly – Case studies are important in particular when selling a (highly) technical product or an intangible service. The lack of credibility as a new market entrant is a problem and removing that barrier is very important.
9) Know what financial support is available for internationalisation – Grants and subsidies can potentially help small companies minimise the financial risk of investigating the UK market potential prior to committing to it. Export support programmes can potentially help with funding towards a UK market study or provide advice and introductions.
10) Is your product or service innovative and is it differentiated – Of course you think this is the case, but is it really? It is quite simple – technology alone doesn’t sell your product. While a particular technology (or product feature) can help you make a stronger case, it is much more important to work out the main benefits of using your product. It is more difficult to enter the UK market with a ‘me too’ product as your marketing messages are likely to be undifferentiated.
11) There are an awful lot of accountants in the UK – Never go into a meeting with a potential UK customer without having accurate return on investment (ROI) calculations and a bullet proof commercial model. UK customers want to know what is in it for them and their customers, technology is secondary.
12) Subsidiary vs Distributor – Setting up a subsidiary in the UK has advantages and disadvantages.
- If you open a physical UK subsidiary you are seen to be taking the market more seriously
- With a subsidiary you can minimise potential tax complications e.g in form of transfer pricing complications
- Opening a subsidiary puts you in control
- A subsidiary typically requires more resources than a distributor or agent
- “Distributors are like bikes and need to be pedaled” – if you decide to use a distributor be prepared to put resources behind them to make it more attractive for them to sell your product/service
- Distribution agreements can tie a company to an ill performing distributor if they are not careful. Make sure that you restrict exclusivity, the length of the agreement and that you reward good performance for example by paying a bonus for hitting particular sales targets
13) Partner with local companies – You are more likely to succeed if you partner with UK companies that sell complementary products in your target markets. Identifying such companies is easier said than done but very rewarding if you get it right. Make sure they are motivated (by that I don’t mean desperate) to partner with your company. This can be the case if they believe they can have a competitive advantage by partnering with you. Researching potential partners in the target market should be part of your overall market introduction plan.
© 2015-2016 Dirk Schaefer, Techmark