There are no hard and fast rules about how to launch your brand or product into a new market. However, the approach you choose will determine how fast you reach your objectives. Market entry strategies are at times determined by factors beyond your control. This implies that different markets might at times require completely different approaches. Therefore, the most important factor is to tailor your strategy for each individual market.
Here are some steps you need to take before choosing your market entry strategy for new products.
- Identify your target market
This is the most crucial step before venturing out into a new market. You need to understand the needs of your potential clients. Figure out how your product can address those needs. Think about other pertinent factors such as language, culture, distance and local regulations. Do not focus on large markets; give attention to smaller markets as well as these may have less competition.
- Conduct a thorough market analysis
This entails getting into the details of your target market. Carry out thorough research into the market’s growth rate, the potential demand, competitors if any and the barriers you will need to overcome to trade in that market. Use market research reports to analyze trends on your product of choice as well as other related products. Find out whether you need to change anything about your product in order to sell it to specific markets.
- Assess your company’s capacity
With your market research data at hand, it is now possible to assess whether or not you are capable of meeting your prospective client’s needs. Do you have the resources to trade viably with this market? Are there any constraints that need to be addressed? Does your company have the infrastructure to export into that market?
- Select a market
From your list of target markets, you now need to prioritize a few that seem promising. In order to do that you need to look at how well you fit into each of them and the resources needed to satisfy them. Figure out whether there is an actual gap in that market and if you can fill it better than the competition. Establish whether you have something of value to offer to prospective clients and if their market price makes business sense.
- Develop a distinct strategy
Once you have picked out a promising target, you now need to develop a new market entry strategy. At this point, you want to determine what level of investment will achieve the intended objective. Only then can you structure a sensible entry plan. Fortunately, there are sufficient resources on modes of entry into foreign markets with sufficient examples. Make good use of these as learning aids to establish the dos and don’ts of venturing into new export markets.
Market Entry Strategies
When entering into a completely new market, you will mostly need some sort of partnership in order to find your footing. This will help you to address the most common barriers to international trade successfully. But you need to conduct due diligence to ensure that all the risks and costs are well catered for. When you get this right, you can successfully mitigate the major risks associated with international trade.
Let us consider the most common business entry strategies for exporting into a new market.
- Direct Exporting
This is one of the most common options that business people employ. It involves making direct sales into the market of choice. It basically requires that you set up a sales process and look for representatives to assist in pushing the agenda. In the majority of cases, exporters turn to sales agents and distributors to help them connect with the local markets. Keep in mind that these will be perceived as the face of your product. So take as much care in selecting them as you would in choosing your staff members.
- Buying a Local Company
Certain markets are extremely difficult to enter due to government regulations unless you own a local company. At times also, you might choose to buy a company to eliminate or reduce competition. This is a very costly option and requires a lot of research. You need to take your time to find out the market value of the company you plan to buy. When executed properly, this method is an instant win. You immediately get to enjoy local status and all the perks that come with it. You also get an established clientele base and all you need to do is ensure continuity.
Franchising is a market concept whereby companies assign independent parties the right to sell your goods and services under your business name for a specified period. It is most popular for businesses that have a repeatable concept that can easily be adapted to a new market. This model is not for everyone however. It works best for businesses that have a very strong brand presence. It could also work if your concept is unique. But keep in mind that in entering into such an agreement, you might end up creating your strongest competitor. If done right, it offers a high success probability without the need for capital input.
- Joint Ventures
This market entry strategy framework is comparable to a partnership in certain ways. In this case, you need to identify a company whose interests are similar to your own. But instead of merging your two separate entities, you create a third independent one. This new company operates in the specified new market and profits made are split equally.
This strategy is less common than most others. If you happen to be selling a product or service to a firm involved in international trade, you could ask them to sell your item along with theirs to their target markets. This arrangement usually operates on commission basis and mostly offers a positive response. For as long as your product does not pose a threat to any of theirs they will be willing to include it in their inventor. They market the item alongside their own and reduce costs for you and offer you a ready market.
Some target markets regulations require that you form a partnership. These come in many forms but essentially involve joining forces toward a common goal. It could start right from the manufacturing stage or come in as late as the marketing stage. This will depend on what you need from a partner and local dictates. The method is particularly useful for entry into foreign markets whose culture and language differ from your own. Partnering with a local comes in handy bringing in ready clients, knowledge on the local market and other contacts.
- Greenfield Investment
This involves setting up a complete local operation from the ground up. It takes up a lot of time and money to set up and also comes with a high level of risk. It requires that you hire from the local community and meet the governmental regulations applicable in the country. Unlike most of the other models discussed above, it provides you with complete control of your brand. You get to learn the market nuances firsthand and adapt. It is therefore linked with the highest returns for traders.
Pioneering vs. Late Entry into a New Market
In many cases, being the first into a new market presents uneatable odds of success. This will be relatively easy for you if you have a new or unique product to offer. As a pioneer, you have the opportunity to become a powerful incumbent against whom all late entrants are measured. However, some pioneers have it easy from the get-go and become complacent. It is also a lot more costly as you have to invest heavily in research, manufacture and product promotions.
But in most cases, early entrants will always have a market share advantage over the rest. This is because consumers do not like to take risks. Once they identify a product that meets their needs to satisfaction, they will probably choose to stick with it to avoid risk. Additionally, due to consumer education campaigns, the first products into a market become a yardstick for all others.
Regardless of when you make your entry into a new market, you have equal chances of success or failure. You simply need a good market entry strategy plan and the rest will fall into place.
Here are a few pointers to guide you in the right direction:
If you happen to be a late entrant, price your goods lower than the pioneer’s. This could have two effects. First, you may become a viable competitor and get a significant market share from the pioneer’s clients who decide to switch. Second, you might create new customers for whom price was previously a barrier. This will of course lead to lower profit margins for you unless you can get the products at a cheaper price than your competitors.
- Focusing on a niche market
Instead of sitting back and sharing the existing market for a product, you could expend your horizons by enhancing it for a niche market. This could get a small portion of the existing market to be your dedicated customers or even attract new clients. Either way, it gives you an edge over competitors as you have something extra to offer.
- Customer service
One of the biggest problems that clients report when a single product or company dominates the market is complacency. Knowing that customers have nowhere to turn, some business persons become careless and do not offer quality customer care. If you happen to be a late entrant you could exploit this loophole and gradually win clients over from the competition. If you happen to be the first on the scene, remember that customer service is the backbone of any good business. Uphold high standards and you will reap the rewards.
- Find a way to stand out in cluttered markets
When there are too many brands of similar products in a market, consumers become confused. The one sure way to get past this is to make your product distinct. This can be achieved by either altering the product or conducting serious promotional campaigns. When you find a way to stand out from the rest, this will increase product visibility and lead to success.
- Take advantage of market shifts
When there is a paradigm change in the market due to new innovations or regulation changes, you can successfully ride this wave and end up on top of the food chain. The key is timing. Be the first to react to the change and offer your customers a suitable solution while your competitors struggle to adapt.
There is no umbrella method when it comes to market entry. It however demands in-depth research into the target market, a review of your company’s objectives and the risks involved. When you take all these into consideration, you can more effectively weigh the different market entry strategies advantages and disadvantages and make the right choice. And even after you make your entry into a market, you need constant updates and further research in order to stay relevant. In international trade, things change really fast and the only way to stay ahead of the game is to always look for information.
Start Exporting into New Markets with Waystocap
With so many market entry strategies on hand and so many considerations to make, taking the first step into a new market may seem daunting. It might be easy for a seasoned entrepreneur to figure out the business aspects of the equation. But getting acquainted with local regulations and export procedures is not quite as simple.
Waystocap provides the necessary tools and insights to help you take that first step towards success. Our website is loaded with resources on international trade to help you enter emerging markets with ease. We have sufficient experience offering import export trade solutions on the African continent. Our site is the first African B2B platform to enable trade with this continent of contrasts.
With Waystocap, you can easily create a network of fellow international traders on a secure platform. We have a comprehensive community of buyers and sellers and also provide support services for businesses operating on the continent. We help you handle the tedious logistical aspects of international trade and get insurance for your cargo. We are looking to revolutionize trade in Africa and we invite you to join us.