Pros & cons of introducing an application to new markets
Some obvious benefits of introducing an application to new markets include:
Access to new customer demographics
Diversification of risks and revenues
More sales and profits
Less competition compared to the domestic market
Opportunity to penetrate a specific niche
Access to more investment opportunities & capital
Additional tax benefits
Lithuanian Vinted expanded into Germany within a year of launch. It then entered other European markets, the UK and the US with an estimated valuation of €3.5 billion, attributing its success largely to successful international expansion strategies.
Expansion may also involve some risk:
Bad timing: expansion too late or too early
Budget constraints: no funding or low cash flow
Regulatory and compliance bureaucracy
Lack of market knowledge leading to marketing flops
Weak local distribution strategy
Little knowledge of the local market
How to approach the subject wisely?
1. Identify the market
Before you decide which way to go with the expansion of your mobile app, analyze your target demographics, state of the market and competition, including:
Market’s availability: number of potential customers, expected profits
Current state: what is the situation of the company on a given market at the moment – traffic in the application, number of leads and conversions
Customer addressability: ease of entering the market – integration with available payment systems, local distribution channels, etc.
2. Competition analysis
When conducting a target market analysis, it’s easier to lean towards larger, more promising markets, but it’s worth remembering that they also come with more competition.
If your niche already has a major competitor that local customers love, you’ll need more resources to stand out. This often translates into higher customer acquisition costs, lower prices (and lower profit margins), and large investments in local activities.
How will such analysis help?
You will get an insight into which customer groups to focus on
Analysis of other apps with similar features will help you determine which brands do users choose the most
You will discover important market gaps that can be exploited in your business – e.g. types of customers ignored by other brands
Almost every EU country already has a local Amazon alternative, like Allegro in Poland, Cdiscount & Fnac in France or Coolblue in the Netherlands. These players make it more expensive for Amazon to enter the market which effectively deprives it of profits.
3. Marketing & SEO
Due to the potentially large number of applications that may have a similar purpose to yours, it has become necessary to effectively promote your solution. No matter how useful it is, your audience needs to know about it. For this purpose, it is worth optimizing your mobile solution for app stores and search engines, publishing blog articles that support the positioning process and uploading the application to review services. You should think unconventionally and adjust the communication and marketing strategy to a given target group.
What else can you do?
Create an exact description of your solution in app stores and choose the right keywords
Choose screenshots that best reflect the functionality of your solution and show it from the best side
Be active on social media
Create a website as a showcase of your brand
Check where your target group spends their time online and advertise in those places
Show how to best use your app by creating a video tutorial
Tinder invested in visiting universities to reach a target group with the greatest potential – millennials – and help them in manual registration in the application. This move increased their user base from 5,000 to over 15,000.
4. Define your KPI
To make sure your app has a chance to succeed in a new market, you need to define your KPIs (Key Performance Indicators). Setting measurable goals will be the key to achieving the results required to move forward.
Exemplary benchmarks:
The number of active users measured as DAU, WAU and MAU – daily, weekly and monthly
Cost measured with CPA (Cost Per Acquisition), CPI (Cost Per Install) and CPM (Cost Per Mille)
CTR (click-through rate) measures the effectiveness of an ad
Conversion Rate: percentage of users who took an action
Retention Rate: percentage of users who use your app after X days
Reengagement: how many users returned to your app
Quit rate: rate at which users stop coming back to your app
Uninstall: how many users will uninstall your app and when
ROI: a measure of the profit or loss of an investment.
ROAS: return on ad spend for each channel
ARPU: average profit earned per new user
LTV: the total amount that a user can spend before deciding to stop using an app
5. Check the performance of your application
Before you start launching your app into a new market by distributing your ad spend across channels, you need to make sure your app is fully functional and ready to be shared with a wider audience. Performance issues can lead users to give up and uninstall apps, so testing and locating bugs will prevent you from wasting your budget.
It is recommended to test in the three most important fields:
Performance with increased traffic and heavy use
Hardware test, e.g. amount of space on the server
Critical application performance
Wrapping up
The conclusion of this article is that there’s always (or nearly always) a place to evolve your software solution. Doing it wisely may come with a great deal of benefits, but the process needs plenty of consideration and proper consultation before taking off for the success. As everything, it comes with possible risk of failure, so it’s better to be safe than sorry.
