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Prioritising new markets and locations – a simple but powerful approach
Lead Retail Consultant UK
Experian Marketing Services
When considering entering, or expanding operations, in a new market, be it a country, region, or city, a store led business must sift through multiple options in order to design the best possible roll-out strategy. While some organisations, such as large retailers, employ teams of market analysts dedicated to the management of a Market and Location Strategy Plan, many smaller companies do not. It is only when faced with imminent expansion that most medium-to-small sized businesses seek to prioritise the highest potential opportunities in their market of focus.
A high potential opportunity is one that offers an optimal mix of economic, demographic, and environment characteristics, that together drive successful performance in the products or services offered by a company. For example an up-market cosmetics business may seek locations in affluent markets with a high proportion of women from high income households, and with a sufficient density of other premium level retailers.
However, the task of prioritising new markets is not easy – particularly where a business has little in-house market data or analytical resource. In response to this, Experian has helped many smaller businesses respond effectively to this challenge, through a simple but powerful methodology for ranking prospective locations within any given market. Experian’s Location Potential Tool is designed to help clients quickly sift through opportunities, and form a high-level but robust Market and Location Strategy Plan – as a precursor to more detailed location specific analysis.
The Experian Location Potential Tool
The tool is always tailored to a client’s specific requirements and trading context, however it typically assesses potential on the basis of 3 groups of data.
Example market data incorporated in an Experian Location Potential Tool:
Market Demand Data Market Supply Data Market Context Data
Market Demand Data
Market Supply Data
Market Context Data
The tool brings together key market data for a list of markets or locations, and scores them according to their potential based on weights applied to these data variables. The weights prioritise the most important market drivers, and will produce a ranking based on a transparent and justifiable rationale.
In the example below, London retail markets are ranked according in criteria set by an upmarket cosmetics chain: the total number of target consumer groups in each (50%), followed by the overall daytime population (25%), and the density of other premium operators in the market (25%). This approach identifies the markets that must be included in the chain’s roll-out strategy.
Example: Location Potential Tool for an upmarket cosmetics retailer seeking to prioritise London retail markets
Who is it for?
This approach is ideal for businesses without the budget or analytical capability to carry out market analysis in-house, yet which must design a high-level Market and Location Plan driven by dependable insight. The tool is easy-to-use and can be deployed to senior managers keen to draw up an initial list of market priorities. Furthermore the tool often introduces businesses to the benefits of location planning and can lead to the development of more sophisticated location analysis overtime.
Experian’s tool is applicable to many sectors where the ranking of markets by potential is a fundamental strategic exercise, such as Retail, Finance, Telecoms, Healthcare, Consumer Goods Distribution, Food, Leisure, Automotive, and Real Estate.
The benefits of this approach
The Location Potential Tool solves a significant challenge faced by growing businesses – by bringing together and ranking the key market variables associated with successful performance, it helps our clients draw up ‘hit-lists’ of target markets and locations, quickly and intelligently.
- Simple but powerful means to prioritise markets according to the potential they offer a business
- Driven by a business’ own understanding of what drives successful performance
- Based on transparent and adjustable logic
- Delivered in an intuitive and easy-to-use tool framework