New and emerging markets open up numerous opportunities and have limitless potential for growth. However, when to take a closer look at the annals of business history, it shows that for every successful market entry, about four fail. Interestingly, it is not just inexperienced startups that face the heat from new markets while implementing their market entry strategies, several sophisticated corporations also face the same fate. Industrial strategists at Infiniti Research agree that successful market entry strategies depend largely on factors including timing, scale relative to the competition, and the ability to leverage complementary assets. Moreover, it is vital to undertake detailed analysis and market research before entering a foreign market.
In our experience, the combination of a robust outside view and an improved inside one dramatically raises the odds of making good market entry decisions. Get in touch for more insights on building effective market entry strategies!
How do you select market entry strategies?
Having a myopic focus on market entry strategies prevents companies from creating a reference class of similar business plans and market entry decisions in the past. While formulating market entry strategies companies must consider these factors which are strong predictors of success in an international market entry strategy:
Size of entry relative to the minimum efficient scale
The market entry strategies of companies whose minimum efficiency scale is closer to that of the industry have a larger chance of becoming successful. Entering a below minimum efficient scale and then scaling up proves to be more viable in the case where companies test a new market.
Relatedness to the market
Companies whose current portfolio is more related to the market they plan to enter into have greater chances of gaining a strong foothold in the market. There should be a thoughtful assessment that examines the degrees of difference between the potential market and the current portfolio.
Order of entry
In some cases first movers have the advantage over laggard rivals in some cases, diversifying and greenfield companies are on very different entry clocks. Early greenfield entrants often lose out to experienced players that diversify into the market later.
Industry life cycle stage
The life cycle stage at which the industry is in when a company makes the market entry greatly influences the opportunities for success. The odds for success are greater for companies that enter into an industry at the early stages of the lifecycle when compared to those players entering near the shakeout. This is one of the key factors to be considered while formulating the market strategies.
Tips for creating winning market entry strategies
Analyze your competitors’ market entry strategies
To compete with already established brands in a new market, companies must formulate thorough market entry strategies that would help them stand out in that market. The first step in establishing this and build the best market entry strategies is to analyze the strategies, price points, and offerings of key competitors in an international market. This helps mold the company’s offerings to resonate with the customers in a new market.
Understand culture and language
Although cultural nuances may seem insignificant during the planning stages it is essential to properly prepare to meet the needs of the local market. To avoid any unfortunate events that may occur due to a lack of knowledge about the cultural difference of a new market, it is vital for companies to gain deep knowledge of the culture and language of a new market before developing their strategies.
Ready to overcome market entry challenges? Know how Infiniti helps companies overcome market entry barriers with robust market entry strategies by submitting a free proposal request.
Review local laws, regulations and bureaucracy
There are chances of landing into a lawsuit if companies do not undertake a thorough understanding of the new market’s laws and regulations while planning their strategies. It is advisable to hire a local attorney who can guide the company and provide insights into the local business laws. This is an integral step while building the market entry strategies. Not doing so can not only tarnish the brand name if caught in a legal offense but can also cause a hefty loss of money for the company.
Create awareness and trust on social media
Social media is a great platform to promote new strategies for the business. The key here is to gain a deep understanding of the customer’s problems, needs, and lifestyle preferences. This will help create social media campaigns where the company and its communications get noticed. Social media gives companies to contribute valuable content that solidifies their credibility, establishes customer loyalty, and builds brand awareness. These are highly critical for companies who want to successfully execute their market entry strategies in an international market. Get in touch for more information on how we can help your business.