Background and Challenge
One of the top direct selling companies in the world had been experiencing flat to declining sales over the past three years as its core market reached penetration. While the business had operated internationally for over a decade, the company had aggressive growth objectives for its international operations and asked L.E.K. Consulting to assist in developing a business plan to support this growth strategy. In particular, we assisted with a market screen to identify the most attractive geographies to pursue and developed detailed business plans for the top three geographies identified.
Approach and Recommendations
First, we used a broad array of data to address market size/growth potential, demographic factors, and political/regulatory risks. Using a proprietary scoring system based on the client’s requirements, we analyzed the data and prioritized the 10 most attractive markets for further consideration. For each priority market, we used a combination of primary and secondary research to assess each market along the dimensions of opportunity (e.g., presence of business model, local competitive environment, potential synergies, etc.) and risk (e.g., registration requirements and level of infrastructure required). This analysis, coupled with further consideration around potential entry options, enabled us to identify three markets for expansion.
For the three markets, we conducted in-country research to develop actionable market entry plans for the client. The comprehensive plans consisted of the following elements:
- Detailed assessment of market segmentation and sizing
- Suggested product modifications to allow for local preferences
- Recommended sales and marketing plans for consumers and distributors (e.g., positioning, messaging, tactics, incentives, pricing, etc.)
- Best practices on how other companies succeeded in the market
- Detailed financial projections that portrayed the revenue/profit opportunity and investment requirements
Our final recommendations for the three target markets blueprinted short- to medium-term sales increases of >20% and produced internal rate of returns (IRRs) as high as 60%-70% in some countries. As a result of our work, the client immediately and successfully entered the first of the identified markets shortly following the project’s conclusion.