Year after year, we hear about ambitious market entries going kaput. Take for example Target’s Canadian expansion, which came to a grinding halt within two years of entering the country. Why is it that so many organizations fail to succeed in international markets? While the idea of entering a new market might seem viable on paper, few actually come to fruition. To be successful, you need to plan your market entry strategy based on a thorough understanding of the market landscape and the competitive and regulatory environment. Based on our experience of helping clients formulate informed business strategies, we’ve outlined four steps for a successful market entry strategy.
1. Understand the size of the market and its growth potential
It’s impossible to succeed in a new market without a deep knowledge of its inner workings. It involves a thorough assessment of the market landscape to ascertain whether there’s a need for your offering and if there’s room for growth. To begin with, evaluate the market size i.e. what type of consumers are most likely to purchase your product/service, will this consumer base grow, and by how much. Next, you’ll want to get a closer understanding at what’s driving growth in the market, the competitive landscape, competitor market share, and the regulatory environment, to be able to make a reasonable estimate of the market potential.
2. Select the right entry mode
The mode of entry is influenced by various internal and external factors, such as industry type, government policies, infrastructure conditions, intellectual property rights, and so on. For example, companies choose licensing and joint ventures in high-risk scenarios, while some choose wholly-owned subsidiaries as an entry mode for greater control over operations.
It’s a good practice to assess previous entries by other players in your target market when deciding the best route to reach your audience. Learning from past mistakes and successes can help in avoiding pitfalls and identifying suitable pathways for navigating a new/foreign market. It is essential that you evaluate the advantages and disadvantages of the different entry modes to select the best model for your entry strategy.
3. Identify the right business partners
Achieving desired business goals requires support from people that understand the local market and can deliver results within a specific period and at an affordable cost. Businesses in a foreign market often need to look outside their own organizations to meet their goals so evaluating the right partners, such as financers, distributors, suppliers, marketing agency, and so on, should be taken into consideration when planning the entry strategy. It’s important to ensure that they have the right industry-focus and capabilities required to sell in your target market to able to establish mutually-beneficial partnerships.
4. Determine which product to launch first
Customers often remember brands by their first product. So it’s important that you choose one that immediately resonates with your target audience and showcases your unique value proposition. Identify your launch product based on factors such as the market need, level of competition, the uniqueness of the product, and price attractiveness.
Download our case study to find out how a baby care products manufacturer based in Turkey was able to guide their market entry strategy using Netscribes’ market intelligence expertise. If you’re looking to enter a new market or expand your presence in an existing market, get in touch with us for a consultation.