International Business

Looking
Markets? for New
Bigger Global
Isn’t Always
Better.
by Nataly Kelly
November 09, 2020

Cactus Creative Studio/ Stocksy

Summary.   As your company develops a market expansion strategy, what’s the

best way to evaluate different global opportunities and determine which makes the
most sense for your business? It can be tempting to simply focus on the largest
markets, but that approach... more

When I joined HubSpot in 2015, we already had customers in

more than 100 countries all around the world. Nevertheless, our
international expansion plans were far from complete. To
determine which countries would require longer-term
investments, and which had the potential to offer us faster near-
term growth, we developed a three-part framework that can help
any company to develop a more targeted expansion strategy:

The MARACA
Opportunities Framework for Evaluating Market
Metric Description Examples

Market Size: How Number of

much opportunity potential
Market Availability (MA) does this market customers, amount
offer? of potential
revenue.

Traction: How are Local traffic, lead

Real-Time Analytics (RA) we currently generation, close
performing in this rates, retention
market? rates.

Ease of Entry: How Integration with

well do our current local payment
Customer Addressability products and systems, product
(CA) services address localization, local
this market? distribution
channels.

Source: Nataly Kelly

This framework, which we call the MARACA model, consists of

three metrics that companies should consider when evaluating a
potential market:

Market Availability (MA): The size of the market relative to

other markets — the number of potential customers and the
estimated revenue potential.
 Real-Time Analytics (RA): How your company is currently
performing in a given market, relative to your top markets. (If
you already have some traction, increasing your investments
there may make sense.)
Customer Addressability (CA): How difficult it will be to
address the specific needs of this market. Understanding the fit
between your current offerings and a potential new market will
give you a sense of how much investment it would take to
achieve product-market fit in different locations.

To implement this framework, we assigned each potential market

a score for each of the three components, on a scale of one to ten.
Think of it like Olympic scoring: a 10-10-10 score would mean a
perfect market, but, as in Olympic games, a perfect score is
exceedingly rare.

So what does this look like in practice? Consider a fictional U.S.-

based B2B company that’s developing an international expansion
strategy.

To start, they would evaluate their home market as a baseline. It’s

likely that the U.S. would be one of their largest possible markets
due to the sheer number of businesses across the country that
could be potential customers, so it gets a 10 out of 10 for market
availability (MA). The company currently performs best in the
U.S., so it would also score a 10 out of 10 for real-time analytics
(RA). And the business is optimized for American customers —
they sell in USD, address customers in American English, and
have good evidence that they truly understand their local
customer’s needs — so they would achieve a 10 out of 10 in
customer addressability (CA) as well. Overall, the U.S. market
would get a perfect score of 10-10-10, meaning that it has
opportunity, traction, and good product-market fit.
Next, the company would consider various potential markets to
target for expansion. Let’s say that two of their top contenders are
Finland and Sweden. How would the MARACA framework be
applied to compare the two opportunities?

Finland and Sweden are fairly similar markets as far as size goes.
If our fictional company wants to sell to small- and medium-sized
businesses, both countries would score similarly in terms of
market availability (MA), because they both have a similar
number of target companies (especially when compared to much
larger European economies, such as France or Germany).

Next, as a U.S.-based company with limited global traction, both

markets would receive similarly low real-time analytics (RA)
scores, so that metric would also be unlikely to provide much
guidance.

Finally, as far as customer addressability (CA), the two markets

might again seem similar. Both countries have strong economies,
high ease of doing business, and similar levels of English
proficiency. However, Finland would get a higher CA score for one
simple reason: the company already accepts their currency (the
Euro), while it is not set up to accept the Swedish Krona. Although
many Swedish businesses pay bills in other currencies, this
limitation would likely impact the company’s ability to sell into
the market quickly and easily.

Another factor that can affect a market’s CA score is the country’s

level of technology adoption. Finland, which is ranked by the
European Commission as the most digitally advanced nation in
Europe, is often targeted by tech companies for this reason. Its
strong culture of early technology adoption — stemming from a
high cost of living, small population, and lack of local competitors
— makes it easier to penetrate for many of these companies.
These types of factors can be subtle and difficult to quantify, but
they are extremely important to consider.
The results of this analysis will drive the direction of your
growth.
The main value of the MARACA model is that it forces you to look
closely at how you would perform in each market, one at a time, at
the micro level. Instead of thinking in generalities across entire
regions or group of countries, it helps you to understand your
company’s weaknesses and opportunities in each local market.
Ultimately, this analysis gives you what you need to better control
your international growth; you can reduce investment in low-
potential markets and focus on investing in countries that are
likely to offer faster traction.

In addition to helping you choose the best markets for expansion,

this framework can provide a direction for product development
efforts. While MA is relatively static for a given market, you have
significant control over CA, which can in turn boost your RA. If
the MARACA model identifies a poor product fit in an otherwise
strong market, you can change your product positioning, pricing,
or packaging — or even create an entirely new product. This
might involve  localizing your offerings, opening an in-country
office, or acquiring local partners.

Of course, the lower your CA score for a given market, the more
work you’ll need to do — so it’s important to consider whether the
MA and RA scores are high enough to justify the cost. In some
cases, it may be possible to achieve the same or even higher
revenue with a fraction of the investment by simply focusing on
the low-hanging fruit available in markets that are smaller, but
easier to penetrate.

***

There is no one-size-fits-all solution when it comes to

international growth. The nuances of your business and the
industry you’re in, as well as your company’s strategic direction,
will help to shape your expansion into new markets. Moreover,
 those factors change over time. Your international business — as
well as the strategic model that informs it — should both be
dynamic.

Over the course of my time at HubSpot, our international

expansion has evolved as we’ve acquired more data, learned more
about our customers, and deepened our understanding of each
local market. Whether you’re just starting to branch out of your
home market or you’re already a ways down the path of
international expansion, this framework can help you think
through your options, compare the requirements for succeeding
in different parts of the world, and ultimately, make data-driven,
strategic decisions that enable you to move forward with
confidence.

Nataly Kelly is the VP of Localization

at HubSpot. Her latest book is Found in
Translation (Penguin) and her blog is Born to
Be Global.

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