Year after year, we hear about ambitious market entry plans 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 some 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 fact is, market entries are no piece of cake. While the idea of entering a new market might seem viable on paper, when put to practice, organizations are challenged by a number of uncertainties. To be successful, market expansion plans need to be backed by well-rounded market entry strategies. One that’s based on a thorough understanding of the focus market, regulatory environment, consumer behavior, among other key information. 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 room for growth. To begin with, evaluate the market size. This means, having answers to questions such as:
- what type of consumers are most likely to purchase my 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 understood the market and identified your target segment, it’s time to examine 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, consumer 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 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, among others. 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 always a good practice to assess previous market entries in your target market when deciding the best route to reach your audience. Learning from past mistakes and successes can help avoid pitfalls and identify suitable pathways for navigating a new/foreign market. Furthermore, it’s important that you evaluate the advantages and disadvantages of the different entry modes to select the best model for your entry strategy.
4. Identify the right business partners
Success in a new market requires support from people that understand the local market and can deliver results within a specific period at an affordable cost. Businesses in a foreign market often need to look outside their own organizations to meet their goals. As such, evaluating the right partners, such as financers, distributors, suppliers, marketing agencies, etc., should be considered in the market entry strategy. While doing so, 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.
Leading brands across the globe partner with Netscribes for reliable data and insights to support their market entry strategies. Speak to us to learn more about how we can help.