Brands get their market entry strategy wrong all the time. Starbucks failed to get its pricing right before opening up in Tel Aviv. Uber massively overestimated the demand for a cheap taxi alternative in Seoul. After launching in Myanmar, Facebook was blindsided when its platform quickly became a propaganda tool. We could go on…
As you can see, no brand is immune to blunders and setbacks when moving into a new market. To tip the prospects of success in your favour, you need a disciplined market entry strategy, backed by thorough research.
What is a market entry strategy?
A market entry strategy is a structured framework for successfully delivering goods or services into a new market. This could be a domestic or international market, but fundamentally, the key elements of the strategy include::
- Clear goals
- Excellent market research
- A strong mode of entry
- Clear proposition and pricing
These elements are then collated into a rational, clearly defined strategy and is used to secure a streamlined and successful market entry.
1. Set out your goals
Successful market entry strategies are founded on clearly defined outcomes. You must set out what you are attempting to achieve, the steps needed to achieve it, and what success looks like for each of those steps. Key elements here include the following:
- The business rationale for the initiative
- The specific product or service you will be exporting
- The target market
- Your unique value proposition in your target market
- The steps you will be taking, and a timetable for actioning them
- Budget allocation for each step
- Targeted level of sales with realistic projections
2. Market research
False assumptions are easy to make. For instance, where a company assumes that since their product has been successful in market X, the same success can be achieved in market Y, with few deviations from the original plan.
Research and analysis prevent you from falling prey to assumptions and biases. When undertaking research, consider the following:
- An evaluation of market size
- Growth projections for your customer base, with realistic market share
- Customer trends, needs and preferences that you are solving for
- The competitive landscape and positioning spectrum – and how you can differentiate
- Examination of the pricing landscape to inform your pricing decisions
- Identification of growth inhibitors and barriers
3. Mode of entry
There is no universal right or wrong method of new market entry. Your choice will be dictated by a range of internal and external factors, including product type, regulatory landscape, budget and attitude to risk (to name just a few). The main modes of entry are as follows:
Exporting: fast market entry with relatively low risk, but with potentially very low control over the actions of distributors.
Franchising: Again, fast entry and low risk, but the legal and regulatory framework must be robust if you are to exercise appropriate controls over licensees.
Strategic alliance: can be useful for gaining trust with a new customer base. However, sharing a partner’s expertise and brand value will inevitably come at a financial cost.
Acquisition: good for fast entry but comes at a high cost.
4. Proposition and Pricing
Strong budget management will make or break the ROI on new market entry. That’s why you need to consider it in your strategy. Proposition and pricing are affected by several factors, including:
Budget. Expense budget by month or year as well as financial targets.
Mode of entry plan. Your preferred mode of entry will have costs and risks associated with it.
Timeline. Time and cost are naturally linked. If you want things done faster it will cost more so establishing a clear timeline for deliverables will help you foresee any potential budget pinch-points..
What does a market entry strategy look like?
Taking into account the above, the basic structure of your market entry strategy might be as follows:
Mission statement. Your goals for the market entry initiative. What the plan is designed to achieve, and the proposed date for achieving it.
Situation analysis. This will cover the areas raised in your research and analysis (above). A SWOT (strengths, weaknesses, opportunities, threats) summary may be useful here.
Opportunity size. A high-level estimate of the scale of opportunity you’ll be tapping into (e.g. the number of people/ businesses within your target market, and approximate spend on products or services like yours).
Why us? What unique advantages do you plan to bring to bear in this market? Are there synergy opportunities? Are you addressing an unmet market need?
Need help fleshing out your market entry strategy? To avoid damaging assumptions and potentially costly miscalculations with your new market strategy, speak to White Space Strategy today.