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  • Writer's pictureRemo Daguati, CEO LOC AG

Investment promotion: are you in the right target markets?

Updated: Sep 18, 2023

In 2015, around 14,000 so-called greenfield projects were counted, for which around 2,500 location development organizations worldwide vied more or less successfully. Accordingly, choosing the right target markets is essential, as significant resources must be spent each year to develop a market sustainably.

Due to the target functions and target sectors to be determined, it should be checked for each market whether sufficient demand can be expected. However, there are many more criteria when choosing the right target market. Language skills have increased in importance. Just a few years ago, emerging target markets in Asia or South America could still be handled in English, but the decision-makers in these markets have become more self-confident and demand advice in their native language. This has a significant impact on the costs of promotion (especially translation costs, wages for multilingual site consultants, etc.).

The maturity of an economy also plays a major role. Anyone who enters a market too early in which the target companies do not yet have a sufficient level of internationalization will need a long breath. At the same time, companies in emerging target markets often open up new markets through company acquisitions (M&A), especially in the early phase, which is why the number of pure greenfield projects remains rather small. On the other hand, markets can also involve high barriers to entry, due to aspects such as corruption, intercultural hurdles (business etiquette), security issues (terrorism, attacks) or other aspects. On the other hand, high entry barriers are also a good indicator that successful companies in the target country want to develop further outside their market.

The result of the target market definition are country lists in which the level of activities is differentiated (basic promotion, promotion with own teams, market cultivation on request, etc.), specific regions are identified in which there are a particularly large number of companies in the target sectors and functions ( cluster) or linguistic and intercultural advantages predominate. Based on this, a targeting concept can then be developed to identify the right key people.

LOC AG supports federal states, regions, areas and cities in the selection of target markets - and has been training investment promotion specialists in practical seminars since 2016.

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