A winning framework for market entry strategies

A market entry strategy is the planned method of delivering goods or services to a new target market and distributing them there. This article talks about the critical issues that needs to be considered while entering a new market and suggests a list of actions that would mitigate the risks involved better, and hence successfully enter the market.

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.

An organization wishing to enter a new market faces 3 major issues:

  1. Marketing – which markets, which segments, how to manage and implement marketing effort, how to enter – with intermediaries or directly, with what information?
  2. Sourcing – whether to obtain products, make or buy?
  3. 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.

Read more about market entry frameworks.

Author: Kar

Dr. Kar is in the Information Systems & Management area in one of the top QS Ranked universities of Asia/world. He has extensive experience in teaching, training, consultancy and research in Indian Institutes. He has published over 100 high impact research papers. He has hundreds of citations as per Google Scholar. He has also authored/edited 4 books. He is the Editor and Founder of Business Fundas. Note: The articles authored in this blog are his personal views and does not reflect that of his affiliations.