When businesses launch a new product in the market, first they study the different types of market entry strategies. Today, entering a foreign market becomes the primary objective of a brand once it achieves maximum output along with optimum stability in the domestic market.
For attaining the purpose of getting access to foreign markets, the businesses need to follow a particular market entry strategy (or strategies, depending on their current status). Well! It is not just that once you enter the market, the need for these market entering strategies finishes, instead of these policies also help you to pave the road for the brand in a long run.
The choice of the market as the next target for your business depends greatly on the brand’s financial structure, the life cycle of the “to be promoted” product and the ability of the product to attract new customers. Once this point gets “the green signal”, the next step is to make a choice for those market entry strategies, which will ease the path for the brand to step out in international markets.
Must Use Market Entry Strategies
- Direct Exporting
Exporting directly and selling a product in the target market is what most of the business owners expect as their first try. Once they establish an overhead in that target market, they turn to other distributors and agents who act to the representation of that product instead of the original owner.
These dealers are just like the face of your brand in other markets since those are what your customers interacting with those markets. That’s why it is necessary to take time in search of those perfect distributors that can lead your business to success.
Franchising is a powerful Market Entry Strategy that lets the businesses; those are repeatable in nature i.e. food outlets, etc. to grow their influence in the target markets quickly. Franchises are just like an identity of your brand in those markets where you can’t take the whole business itself, right from the very start. But there are two prerequisites for the strategy to work as expected.
First of all, make sure that your brand has an extremely strong recognition that could help in spreading the word about the brand. Secondly, be sure to plan ahead because once you enter the market, you should be ready to fight off the competition.
As its name suggests, this practice involves cooperation with another brand, especially a local brand in the target market, to get knowledge about the cultural, economic and many other factors as well as customers, if you choose wisely. In fact, if you are targeting a large marketplace, then it is impossible for your brand to keep standing against those factors, so partnership becomes necessary. And not just that, partnering can also provide you financial aid as well as a pathway to enter a foreign market.
Licensing, one of the most common types of market entry strategies, is a relatively complicated process and needs the brand to forward the rights of using a service or product to another one. This technique can provide you with a much bigger advantage as compared to other ones if the host company is highly popular and has greater shares in the target market. All this leads to the success of your marketing strategies that you make use of, once the product gets into the market.
- Purchasing an already Established Company
The workload of a brand that’s ready to enter a foreign marketplace can, quickly, be lightened up by the acquisition of a company that has already developed its identity in that locality. This strategy provides the brand a stepping stone, in the form of that target company, to step into the market.
Furthermore, it can save your business from getting caught into governmental regulations, since behind the scenes; you will be promoting your brand. If you plan to buy a company that belongs to the field like yours, then that’s just like you throw out one of your competitors and too, without any difficulty. Moreover, its market shares, its recognition and all of its customers will be yours.
- Joint Venturing
The Joint Venture is a twin sister of the partnership but with the idea of backing up another company that stands under the flags of partnering companies. How this idea works is that two companies merge their shares on any basis (often, equally), and give rise to another brand name.
This child company inherits the recognition from both companies alongside, an already built customer base. Ever heard of Sony Ericsson? Well! It’s one of the most famous mobile phone companies working under Sony and Ericsson and is there, in the international market, since 2001 with a 50% share from each side.
- Greenfield Investment
Greenfield Investment is from the most dangerous type of market entry strategy that totally relies totally on the external environment. For the purpose of taking out a company in a foreign market, the brand needs to reshape itself according to that locality and to do that; it has to buy a piece of land and create a manufacturing facility in that area. In this way, the business is supposed to run in that market. Therefore, this technique requires high involvement in determining everything about that target market.
Piggybacking is a less risky market entry strategy that lets a brand promote its product locally to the firms that are involved highly in international businesses. The technique can be of extreme advantage if you have something different to offer to those companies, such that its uniqueness makes those companies include that product in its own products’ showcase for international markets. In this way, the brand gets a chance to promote its product internationally behind the curtains.
- Turnkey Projects
If your brand offers services like architecture, engineering, construction and environmental consulting, then your brand can surely take advantage of the turnkey projects technique. The reason is that in this market entry strategy the services are provided once and for all, and all the authority is then handed over to the client. The risk of fraud, in this case, gets eliminated because the customer type that requires and pays for such services is often an international agency or a government. So, the chances of entering a foreign market get a boost.
Hello everyone! This is Richard Daniels, a full-time passionate researcher & blogger. He holds a Ph.D. degree in Economics. He loves to write about economics, e-commerce, and business-related topics for students to assist them in their studies. That's the sole purpose of Business Study Notes.
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