The Market-Entry Canvas is a valuable tool for businesses to formulate and test their market entry strategies. It is a one-page lean canvas designed to consolidate your hypotheses about entering a new market.
Each column of the canvas represents a critical element of market entry. Within each column are key components and questions to consider, helping you identify knowledge gaps and actionable next steps. Remember, this is a document designed for you to iterate over time.
A guided walkthrough
Watch the video below for a guided walkthrough and worked example with Terry Hilsberg.
The canvas can be applied to any markets or context. In this case, we’re using the Australian market as an example.
To illustrate how the canvas works, we’re featuring a worked example Forcite Helmet Systems, a company that designs smart motorcycle helmets.
While Forcite is a real-life company, the aspects of the example provided are illustrative and may not reflect their actual business strategies or outcomes.
Download template and worked example here.
1. Your mission
The first step involves establishing a product-market fit in your new market. Does the problem exist in the new market? What needs to change? A critical aspect is tailoring your approach to reflect cultural and behavioural nuances among local consumers.
Consider:
- Problem Solved: What problem does your product address? Does this problem exist in the new market? How is it different?
- Target Market: What are the characteristics of local consumers? What geographic area and market segments are you targeting? Who is your target persona?
- Competitive Landscape: Who are your major competitors, both local and international?
- Market Fit: Does your product meet local needs? What differentiates your offering? What adjustments do you need to make?
- Competitive Strategy: What is your strategy to outpace competitors?
- Market Testing: How will you test your product in the market?
Example:
Among Australian motorcyclists, there is an identified need for advanced, tech-integrated helmets. Early adopters are likely tech-savvy motorbike enthusiasts who value enhanced safety and connectivity.
Forcite validated this need by selling over 1,000 helmets to an exclusive Facebook community. This group actively provided feedback, helping refine the product and confirm product-market fit in Australia.
2. Product to customers
This column focuses on how to acquire your initial customers and scaling plans while keeping costs in check.
Key Questions:
- Customer Acquisition: What does your sales funnel look like? How much does it cost to acquire per customer?
- Products: What specific product or service are you offering?
- Scaling Strategy: How will you scale your operations?
Example:
Forcite engaged early adopters through its exclusive Facebook group, offering them insider access while collecting valuable data. This approach minimised acquisition costs through organic community engagement.
3. Making money
The next column helps you understand your financial model and funding requirements is crucial for sustainable market entry. It is important to have an understanding of the local VC landscape as well as government grants for foreign founders.
Key Questions:
- Business Model: What is your revenue model?
- Revenue, Costs & Cash Flow: What is your pricing strategy? What operational costs will you incur?
- Funding: How much funding will you need? Will you seek investment, or are there local grants and incentives available?
Example:
Even at low volumes, helmet sales provided a positive contribution margin. As sales volumes grew, profitability improved. Forcite combined traditional VC funding with government grants, ensuring a solid financial foundation for growth.
4. Your Australia Machine
Entering a new market involves building local operations, hiring the right talent, and addressing legal, logistical, and regulatory requirements. Here are some the on-the-ground operations to address about before you make your move.
Key Questions:
- Branding: Will you need to localise materials or translate content?
- Team Building: Will you relocate a team member or hire locally? Do you need visas or immigration support?
- Logistics: How will you structure your company and protect intellectual property?
- Intellectual property: How can you secure your IP? Do you need to register trademarks?
- Regulatory Environment: What local regulations must you comply with?
- De-risking: What potential risks could jeopardise your market entry? What mitigation strategies can you implement to address them?
Example:
The company plans to establish a local entity in Australia to access various government schemes. This Australian subsidiary will be owned by a Hong Kong parent company, which will license its intellectual property (IP) to the Australian entity.
The existing brand positioning in the U.S. will be leveraged to build brand equity in Australia, as consumer purchasing behavior and preferences are relatively similar. Trademarks are already registered in Australia, and patent applications have been filed in various global markets, including Australia, to protect specific aspects of the system. However, EU certification is required for helmet sales in Australia, and the product may not be eligible for use by learner or probationary riders.
The company will rely on a streamlined dropshipping process, shipping directly from the manufacturer in Taiwan to Australian consumers. Australian GST will be accounted for, and while the internet infrastructure poses no issues, compliance with Australia’s consumer privacy laws, which align closely with GDPR, will be necessary.
The primary operational challenge is recruiting a local business development leader familiar with the Australian market. To address this, the company plans to have its Asia Head spend three months in Australia to test the market before recruiting a local BDM with experience in the motorcycle industry.
Next steps
The Market-Entry Canvas is a powerful tool for businesses looking to expand into Australia. By focusing on clear, testable hypotheses, you can reduce risk, allocate resources effectively, and refine your strategy in advance.
If you find this article useful, check out our other articles and useful guides.
Have questions or need further guidance on crafting your canvas? Reach out to us—we're here to help!
