The fast-growing Vietnam market offers a number of attributes to attract foreign investors. As one of the world’s fastest-growing economies, Vietnam’s GDP is at a 10-year high of 6.8% in 2017. In addition, Vietnam has joined in numerous FTAs and as a result, it has attracted foreign investments in recent years. No wonder to us, if foreign investors would want to penetrate Vietnam’s market. Thus, this article will provide you with information about the preparation market research for entering the market in Vietnam!
Doing Market Research to Support Market Entry Strategy for Foreign Companies
Market entry strategy is an important thing to bring success for every international business, but if you get it wrong, it might be difficult to recover your market position. The popularity of each market entry strategy seems to vary from one particular market to another.
The foreign companies constantly see new market entry opportunities as a way to generate rapid growth, increase their portfolios, and satisfy their entrepreneurial spirit. These market entry strategies also enable companies to improve their revenue base by entering into new geographies, strengthen relationships with existing customers by extending their product offering, and to diversify their customer base by targeting different customer segments.
Furthermore, Vietnam is not a market for inexperienced firms that do not have a well-established export department or business development unit. The foreign companies which prepare to enter Vietnamese market have to plan strategically and be consistent with face-to-face follow-up.
It can take up to one or two years to make a successful sale into this market. However, the foreign companies entering the Vietnamese market may need to consider two marketing efforts, one for targeting the northern part of the country, which has a higher concentration of government ministries and regulatory agencies, and the other one is for the south, which is the dominant industry hub. These two markets are also distinct in terms of consumer behavior and preferences.
Expanding market to Vietnam, the foreign companies probably can do indirectly through the appointment of an agent to ensure that they possess the requisite permits, facilities, workforce, and capital.
The foreign firms that are seeking a direct presence in Vietnam should establish a commercial operation utilizing the following options, firstly, a representative office license, secondly, a branch license, and lastly, a foreign investment project licence under Vietnam’s revised Foreign Investment Law.
How To Conduct Market Research?
When you start a business, you shall take time to plan and market research your strategies before penetrating the market. However, you need to learn some things when conducting market research. For instance, you should ask yourself who are your potential customers, what are customers’ shopping and buying habits, how large is your target market, and so on.
Moreover, conducting and writing a market analysis will take time and lots of research. Nonetheless, these are the seven market analysis to guide you through your market assessment journey!
1. Determine The Purpose of Your Study
There are some reasons why businesses might conduct market research. You may use them to assess business risks, such as threats, reduce issues, or create opportunities.
Before starting any market research, you need to determine whether the analysis is for internal or external purposes. Internal purpose can include things, such as improving cash flow or business operation. While, external purpose is trying to convince investors to give you a business loan.
Your analysis is a crucial part of your small business plan. It will show investors that you know your business that has a growth potential. Therefore, you need to make sure your study will be for internal or external purposes before proceeding with your research.
2. Look at Your Industry’s Outlook
In your analysis, you need to outline the current state of your business, including where the business is heading using metrics, such as size, trends, and projected growth.
This section will let investors see that you have done your homework on your business, and it will show them whether or not your industry is worth their time and money.
3. Pinpoint Target Customers
When you analyze your market, you must determine your potential customers. This process is called a target market analysis.
If you break down your customers, and find out their needs, interests, personalities, and demographics, you will find it easy to pinpoint the target market, also can cater to future customers and market more efficiently.
4. Compare Your Competition
Understanding your competition is needed to analyze the market. Plus, you have to know who your competitors are trying to target.
Take the time to research what other businesses are there. Look at things like your competition’s offerings, location, targeted customers, and disadvantages in the market.
Once you outline your competitors’ strengths, weaknesses, opportunities, and threats, rank them from most to least threatening. Next, you can determine your startup’s advantages and marketing position.
5. Gather Additional Data
Information is needed when conducting a market analysis. The more information you gather, the better off your business will be.
The data you have should be unbiased, relevant, and factual. You should be able to back up your research and make decisions based on accurate information.
6. Analyze Your Findings from Market Research
After analyzing the market, it is time to take a look at your findings. Outline all of your research and organize it using different sections, including sections for your purpose, target market, and competition.
Based on your research, you will be able to forecast other things for your business, such as cash flow cycle, gross margin, and customers’ buying habits.
7. Put Your Market Research Analysis into Action
Spending time to conduct a market analysis is well worth it, but you need to put your analysis into action, so your extensive research will not be wasting.
For internal purposes, look at how you can use your findings to improve your business. Use your analysis to see if you can make any of your business processes more efficient.
If you conducted an analysis for external purposes, be prepared to speak with investors about your research. After finishing all of these, you can revisit your market analysis for necessary tweaking.
Penetrating the Vietnamese market is relatively easy, if you conduct market strategy, analyze, research, then put all of them into action. However, conducting market research is the way to boost your business, especially the business that is ready to enter the new foreign market. In conclusion, keep it in mind for 7 steps to guide you through the new foreign market, especially in Vietnam.