The Importance of Market Research when Entering New Markets

Panasonic is an example of a company using market research to enter a new market. The company is about to enter the European smartphone market. While Japan is Panasonic’s main market for phones, the company does not see many growth opportunities there. Laurent Abadie, Panasonic European CEO, stated how the decision to enter Europe was on behalf of the consumer demand. The European market for mobile phones is continuing to grow and mature, but does not have many choices for consumers. Hence, the Panasonic Eluga will be the company’s first phone to enter the market in April. It’s sleek design and quality features will hopefully win over smartphone users. As stated by Abadie, “We believe the market lacks a range of phones that successfully mixes beauty, high-quality engineering, and the most advanced lifestyle-enhancing technologies.” Through analyzing market offerings, Panasonic was able to create a product that provides unique features. Not only does the Eluga possess a sleek appearance, the phone is waterproof and works with Panasonic’s Smart Viera TVs.

There are many elements involved with entering new markets. A company must take multiple factors into consideration and do extensive research to prevent and mitigate the risk of failure. For instance, cultural differences can have significant consequences on a firm’s decision to enter a new market. Specific customs may prohibit a market from being interested in the company’s offering. Also, many firms are restricted due to language barriers. Product slogans can translate to completely different meanings. Unfortunately, this has prevented various companies from entering some markets. For instance, the baby food company Gerber is not in France because its name translates to “vomit” in French. In addition, Crayola needed to change some crayon names due user perceptions. The color “Indian red,” originally named after a specific red pigment from India, users assumed it to be named after Native Americans. Hence, Crayola changed the name to “chestnut.” It is vital for firms to understand the social norms, customs, and culture of different markets to ensure successful implementation. Despite globalization, markets continue to have specific characteristics that may require firms to alter their products before entering these regions.

Good market research permits firm’s to set realistic goals. Panasonic hopes to sell 1.5 million smartphones in Europe by March 2013. Furthermore, market research enables firms to understand possible threats and barriers they may encounter. For example, Fujitsu is looking to enter the European smartphone industry. While Fujitsu is still negotiating the logistics of entering Europe, it is important for Panasonic to be aware of this possible competitor when making decisions.