Expanding into a new market can feel like standing at the edge of a cliff. The opportunity looks exciting, but the risks are impossible to ignore.
🤔 Will customers accept your brand in this space?Â
🤔 Is the demand strong enough to justify the investment?Â
🤔 Are competitors already dominating?
These are the kinds of questions market entry research helps answer. It provides the evidence businesses need before committing resources, shaping strategy, or launching something new.
In this guide, we’ll explain what market entry research is, why it matters, and how it can be the difference between a successful expansion and a costly misstep.
Along the way, we’ll share examples, methodologies, and insights from our experience conducting this type of research across industries.
Market entry research is the process of evaluating the potential success of entering a new market, launching a product, or expanding into an adjacent category.
It combines data-driven analysis with consumer insights to answer critical questions, such as:
In short, market entry research ensures companies don’t rely on gut instinct alone. It arms decision-makers with evidence so they can move forward with confidence.
Entering a new market is a high-stakes decision.
Each year, over 30,000 new products are introduced to the market. But 40% won’t survive past 24 months.
That statistic is alarming, but it underscores why conducting market research upfront is so important.
In our experience, businesses that invest in market entry research are far more likely to succeed.
For example, Drive Research partnered with a healthcare client exploring the surgical glove market within hospital pharmacies. Through a mix of interviews and surveys, we identified glove usage patterns, purchasing drivers, and market size.
These insights gave the client a clear picture of opportunity and how best to position their product for entry.
More on that story here: How to Determine Opportunity Size When Expanding into New Markets
Expanding into a new market without research is a little like building a house without a blueprint. You might get lucky, but more often than not, the structure won’t hold up.
Perhaps my favorite real world example of this is Coca-Cola’s launch of “New Coke.” They conducted blind taste tests and learned that people preferred the sweeter formula.
But, the company failed to account for emotional attachment to the original. The backlash was so strong that sales dropped and Coca-Cola was forced to bring back “Coke Classic” within months.
Deeper new product development research into brand loyalty and emotional connection would have revealed the risks of changing the formula before launch.
Here are other common mistakes we see companies make when they skip market entry research:
The first question businesses ask is often, “Is this worth it?” Market sizing and demand analysis helps answer that by estimating how many potential customers exist and how much revenue they might generate. This analysis combines secondary data, such as government reports and industry publications, with primary research, such as custom surveys.
Not all customers are created equal. Customer profiling identifies the audiences most likely to embrace your product or service. Segmentation goes deeper by breaking audiences into meaningful groups, such as high-, medium-, and low-frequency users, so businesses can tailor strategies to each group.
For more context, here is an example customer segment from a survey we conducted with grocery shoppers. Here we identified a group of value-driven buyers who prioritized organic foods and go out of their way to purchase healthy grocery items.
Even if there is demand, businesses need to know what they are up against. Competitive benchmarking evaluates how your brand stacks up against existing players. This may include comparing brand awareness, pricing, features, and customer satisfaction.
Some opportunities carry hidden risks. Expanding into a new category can confuse or even alienate your current audience. Market entry research measures these risks by testing how customers react to your brand in the new space and whether it affects overall brand perception.
A good idea can still fail if it is poorly communicated. Testing messaging with real customers ensures you know which words resonate and which ones cause hesitation. This step can also identify the value propositions that set your brand apart.
A great example of this is a copy testing survey our team conducted for a specialty fruit brand in California. The research revealed which creative assets boosted awareness, which headlines captured attention, and which attributes were most appealing.
These insights gave the brand clear direction on how to position itself in a competitive marketplace.
There are many types of market research available for conducting market entry research.
Broadly, these fall into two categories:
Most projects benefit from a combination of both qualitative and quantitative insights.
To simplify this a bit, here are the top research methods we’d recommend.
| Methodology | Description | Best For |
|---|---|---|
| Online surveys | Custom surveys provide reliable, large-scale data about customer preferences, behaviors, and purchase intent. For example, a 15-minute survey with 2,000 respondents can reveal demand levels, competitor benchmarks, and reactions to value propositions. | Quantifying demand, testing messaging, and benchmarking competitors |
| In-depth interviews (IDIs) | One-on-one interviews with customers, experts, or business partners reveal insights that surveys may miss. They are particularly useful for exploring motivations, barriers, and nuanced decision-making processes. | Understanding detailed perspectives and uncovering hidden drivers |
| Focus groups | Group discussions allow businesses to observe perceptions and reactions in real time. This format helps test ideas, messages, or product concepts in a dynamic setting. | Exploring group dynamics, gathering feedback on concepts, and refining messaging |
| Desk research | Reviewing secondary sources such as trade publications, industry databases, and government reports provides valuable background. This step often forms the foundation before moving into custom research. | Market context, competitor mapping, and identifying knowledge gaps |
A major national brand known for its strength in the insurance sector was exploring ways to expand into financial services. Leadership believed personal lending was a promising growth opportunity, but they knew instinct alone wasn’t enough.
While secondary research gave them a starting point, they needed the voice of the consumer to validate whether their brand could credibly enter this space without alienating existing customers.
The client faced two critical questions.Â
Entering without answers risked damaging reputation, diluting brand clarity, and missing the mark on messaging.
To tackle these questions, our market research company designed a custom online survey using a test and control framework. Thousands of consumers across the U.S. were asked about their financial decision-making, borrowing preferences, and brand perceptions.
One group was exposed to the new service concept, while the other was not. This design allowed researchers to isolate the impact of the new offering on key measures such as trust, brand likeability, and intention to use.
The results painted a clear picture of opportunity.
Current customers responded positively to the idea of loan services, and even non-customers showed strong interest in considering the brand for lending.
The research also uncovered specific audience segments most receptive to the value proposition, defined by a mix of demographics, socioeconomic traits, and financial behaviors.
Equally important, the study identified which messages built credibility and which ones risked creating confusion or skepticism.
Armed with this information, the client gained a deeper understanding of both upside potential and brand risk.
The findings highlighted how to position the offering, which value propositions resonated most, and how to differentiate from established competitors in lending.
Rather than guessing, the company could now move forward with data-backed confidence, knowing exactly where their strengths lay and how to tailor their strategy for a successful market entry.
Considering a new market, product, or category expansion? Market entry research gives you the clarity and confidence to make the right moves.
Our team at Drive Research specializes in designing custom studies that uncover opportunity size, identify risks, and guide positioning strategies.
Reach out today to start a conversation about how we can support your growth plans.
