Businesses struggle to become established in their home markets. Once you are established in one market, you can enter a new one with a strategy. Read on to learn market entry tips so you can have significant market share and business revenue.
What Is Market Entry Strategy?
A market entry strategy is a roadmap an organization follows in order to market their brand and distribute their products or services in a new market. A country, channel, or region is considered a market.
Types of Market Entry Strategies
There are a few market entry strategies to consider:
Franchises are the most common methods of entering a market not only in the United States but internationally as well. Some examples of franchises include McDonald’s, Pizza Hut, and Starbucks.
You can also buy an established company which might be required if you want to enter foreign markets. This type of market entry strategy may be costly but will be beneficial for you because you are already buying a company that is well established.
Licensing is more affordable than purchasing a company. By licensing a product or service, they transfer rights to the licensee for a fee. The product or service can be used for marketing or production purposes.
When two or more entities work together a partnership occurs. Local partners sometimes can have existing contacts in the new market. Sometimes a local partner may be required for market entry.
Joint ventures bring two companies to crate a new third one to branch into a new market. Profits, risks, and costs are shared among the companies in this strategy.
How to Make a Market Entry
Define your market
Identify your target market by taking a look at demographic information such as age, gender, and income. Other information includes language, spending power, buying patterns, personal interests, internet browsing, life goals, and more.
Perform a market analysis to consider how you stack up against others in your market. A market analysis contains the following:
- Size of market
- Economic environment
- Barriers to entry
By this point you will have a strong analysis of how successful your business model will be in your target market. If your analysis looks good, you will want to move forward with the next step which is an internal analysis.
It is important that you perform an internal analysis as well. To do this you can perform the SWOT analysis. SWOT stands for strengths, weaknesses, opportunities, and threats.
It should involve the employees and every stakeholder to help your business improve.
Create an Action Plan
Develop an action plan that consists of goals as well as how you are going to execute it. In the case that you fail, you should also have a plan for that as well. It will help you reduce your losses if your action plan is not successful.
Your action plan should include a business plan, case for investment, work plan, timelines, tasks, key milestones, and exit plan.
The Bottom Line
Entering new markets can be a challenge but all you need is a good strategy and an action plan. Take the necessary steps so you can see your business grow and more opportunities in the future of your business.