Year after year, we hear about ambitious market entries going kaput. Take for example Uber’s less-than-stellar performance in Japan. Though profitable in the US, the cab-hailing company has struggled to replicate the same success in many Asian countries. Even the more prolific Starbucks, incredibly popular in the US, failed to crack the Australian market. Why is it that so many firms fail to succeed overseas? The truth is, market entries are challenging. While the idea of entering a new market might seem viable on paper, there are a number of uncertainties involved in the actual process. Successful market entry is a lot of work. It has to be backed by a well-thought-out market entry strategy. One that’s based on a thorough understanding of the market, competitive and regulatory environment, and consumer behavior. Given our experience in formulating go-to-market strategies for global organizations, we’ve outlined the steps that are most critical for success.
1. Know the size of the market and its growth potential
It’s impossible to succeed in a new market without deep knowledge of its inner workings. Getting the right product-market fit involves a thorough assessment of the market landscape to ascertain whether there’s a need for your offering and if there’s room for more growth. To begin with, evaluate the market size. This means, having answers to questions like:
- what type of consumers are most likely to purchase the product/service?
- will this consumer base grow? If yes, then by how much?
- what’s driving growth in the market?
- what are the growth inhibitors?
- who are my competitors?
- what is their market share?
- how conducive is the regulatory environment?
2. Understand the pricing scenario
Once you have assessed the market and identified your target segment, it’s time to assess the pricing landscape. Companies need the right data and insights to form their pricing decisions in a way that gives them a leg up over their competition. This means being informed about competitor pricing actions, customer preferences and willingness to pay, as well as, production cost and fixed incremental costs related to serving specific markets.
Additionally, a competitive mapping exercise will offer insight on the positioning, promotional media selection, and consumer perception of competitor products to help you identify any value gaps and inform competitive-pricing decisions.
Netscribes uses quantitative and qualitative methods for gathering information about competitive pricing actions and customer preferences to provide an accurate understanding of the range of prices likely to yield positive results. We further combine analytics to help companies determine optimum prices and inform discounting and bundling decisions.
3. Evaluate entry-mode options
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.
4. Identify 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 agencies, 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.
5. First-product launch
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.
Read our case study to find out how a baby care product manufacturer was able to guide their market entry strategy with in-depth market intelligence by Netscribes. Alternatively, get in touch with us to know how we can support your organization in strategically entering a new market or expanding in an existing market.