A market entry strategy is the planned method of delivering goods or services to a new target market and distributing them there. When importing or exporting services, it refers to establishing and managing contracts in a foreign country. Few companies successfully operate in a niche market without ever expanding into new markets but most businesses achieve increased sales, brand awareness and business stability by entering a new market. Developing a win-win market entry strategy involves a thorough analysis of multiple factors, in a planned sequential manner.
When an organization makes a decision to enter an new market, there are various issues that needs to be thought out. These options vary with cost, risk and the degree of control which can be exercised over them. The simplest form of entry strategy is often exporting, using a direct (agent) or indirect method (counter trade). More complex forms include truly global operations which may involve joint ventures, or export processing zones.
- Marketing – which markets, which segments, how to manage and implement marketing effort, how to enter – with intermediaries or directly, with what information?
- Sourcing – whether to obtain products, make or buy?
- Investment and control – joint venture, global partner, acquisition?
Firms can follow the mentioned steps in sequence to create that successful blend of strategies while entering a new market.
Planning these few steps in details would ensure that firms face less risk while entering a new market during expansion. Although there is no absolute success mantra to enter a new market, these activities would significantly lower the risk exposure of the firm and create a winning scenario.
Have you read our article on the Porter’s Five Forces analysis of industry competitiveness? This is a must-read article for anyone planning to get into a new market.