Market Entry Strategy
Market Entry
is the planned method of delivering goods or services to a new target market and distributing them there. The importing or exporting services, it refers to establishing and managing contracts in a foreign country.
Many companies successfully operate in a niche market without ever expanding into new markets. Some businesses achieve increased sales, brand awareness and business stability by entering a new market. Developing a market entry strategy involves a thorough analysis of potential competitors and possible customers. Some of the relevant factors that are important in deciding the viability of entry into a particular market include Trade barriers, localized knowledge, price localization, Competition, and export subsidies.
Market Timing
Knowing “What countries to enter and when mainly depends on the financial resources of a company, the product life-cycle and the product itself.” The different strategies available are:
- Waterfall Model
- Wave Strategy
- Sprinkler Strategy
Market Strategies
Some of the most common market entry strategies are: directly exporting products, indirect exporting using a middleman, Sales outsourcing, and producing products in the target market. Others include:
- Licensing
- Greenfield Project
- Franchising
- Alliances
- Exporting
- Turnkey Project
- Joint Ventures
- Outsourcing
- Wholly owned subsidiaries
Market Entry and Trade Risks
Some of the risks incurred when entering a new market and start domestic or international trade include:
- Weather risk
- Systematic risk, different from systemic risk, the systematic risk is the risk inherent to the entire market or an entire market segment
- Sovereign risk
- Foreign exchange risk
- Liquidity risk
Market Factors
While some companies prefer to develop their own their market entry plans, other outsource to specialized companies. Clients use EBS and its Partners because of our knowledge of the local or target market, using the services of specialized companies can mitigate trade risk.
Other market entry strategies include:
- Production at home
- Indirect exporting (export merchant)
- Direct exporting (foreign customer, agent, distributor, representative office, foreign branch, foreign subsidiary)
- Production abroad
- without direct investment (management contract, franchising, licensing, contract manufacturing)
- with direct investment (partly owned subsidiary, acquisition of a foreign company, set up a new company, equity joint venture)
Market Perspective
Knowing the Retailers comprehensive marketing plans as it determines the products being sold and how the in-store advertising materials will be displayed is a crucial part of manufacturing consideration. Part of that planning is developing effective retail layout strategies. The product size and display is important because if the product exceeds the space allotted or fail to sale it will adversely impact the product on the market.
Eye Level
Putting products at the proper eye level will help to improve sales. But it is important to remember whose eye level you are trying to reach. If you are trying to sell a product to adults, then put the product at adult eye level. A toy you are trying to sell to children needs to be at a child’s eye level.
Display Cases
Display cases serve several important functions in the layout of a retail store. Expensive product can be put in a lighted display case to draw attention to it. The display case also acts as a countertop customer interaction area for convenience. For example, if someone sees a watch he likes in a lighted display case, then the sales associate can quickly pull the watch out to show the customer. Another function of display cases is that they can be placed near the cash register area and act as another impulse buy area for customers. This method can increase the effectiveness of a display case at the cash-out area by putting a sales associate there to engage customers and answer questions.
