Why Should You Know How to Enter a New Market?
The significance of entering a market lies in the potential to increase revenues, diversify user bases, and enhance brand recognition.
It allows businesses to mitigate risks associated with market saturation and economic fluctuations in existing markets.
8 Steps Involved in Market Entry Plan
- Market Research: It involves exploring the unexplored market to understand its people, customer preferences, market competition, and rules and regulations. This can be achieved using various tools and methods, such as surveys, focus groups, competitor analysis, data analytics, and product review analysis.
- Market Strategy Development: This step involves creating an entry strategy that aligns with your company’s overall business goals. It will help you decide on the best approach, such as direct entry, strategic alliance, or partnership.
- Feasibility Study: Here, you have to conduct an analysis of financial and operational feasibility, including cost-benefit analysis, potential return on investment, and resource requirements. You will identify potential risks and develop mitigation strategies at this stage of the process.
- Product or Service Adaptation: This step is for modifying existing products to fit the unique needs and preferences of your unexplored market. Compliance with local regulations and standards should be ensured in this step.
- Tailored Marketing Strategy and Promotion: In this step, you need to craft a localized marketing campaign to reach and engage your target audience effectively. Utilizing both online and offline channels will help you build brand awareness and attract customers.
- Distribution and Logistics: For this step, you are responsible for establishing a reliable distribution network. This will help ensure timely and efficient product delivery. Consider cooperation with local distributors or setting up local warehouses.
- Sales and Customer Service: At this stage, it’s important to consider training or hiring a local sales team to understand and meet the needs of your market effectively. It’s essential to remember that delivering exceptional customer service is really important for establishing trust and loyalty among your new customers.
- Monitoring and Evaluation: Finally, You need to continuously track the performance of the entry strategy through key performance indicators (KPIs). When it comes to monitoring and evaluation, gathering feedback and review analysis are the most important components of the process, as they provide you with the necessary information about the strengths and weaknesses of your competitor’s products.
9 Reasons Why You Need Entering a New Market?
Expanding into a different market can transform a business, unlocking opportunities and providing a competitive edge. Below, we will explore the primary advantages of expanding and how they can lead to business success.
- Increased Revenue Streams: Expanding into a new market can open up additional revenue sources. By reaching more customers, businesses can boost sales and profitability.
- Diversification of User Base: Entering a market helps diversify the user base, reducing dependency on a single market. This can provide more stability and lower risks associated with market-specific downturns.
- Enhanced Brand Recognition: Operating in multiple markets can enhance a brand’s visibility and reputation. A strong presence in different markets can lead to better brand recognition and credibility.
- Economies of Scale: Expanding operations can lead to economies of scale, reducing per-unit costs. Larger production volumes can lower manufacturing and operational costs, improving overall efficiency.
- Access to New Talent and Resources: Entering a market could provide access to skilled labour, raw materials, and other resources that might not be available or are more expensive in the current market.
- Competitive Advantage: Being the first to enter a market can provide a significant competitive edge. Early entry allows a business to establish itself as a market leader, making it more difficult for competitors to gain a foothold.
- Innovation and Learning: Expanding into different markets can drive innovation. Exposure to different customer preferences and competitive landscapes encourages businesses to adapt and develop new products.
- Mitigating Market Saturation: When a domestic market becomes saturated, entering a different market offers opportunities for growth that are no longer available in the current market.
- Long-term Growth Potential: Successful entry into different markets can pave the way for sustained long-term growth. As the business gains experience and knowledge, it can replicate its success in other markets, further expanding its reach.
What Are The Risks of Entering a New Market?
When you want to enter the market, your businesses encounter cultural, regulatory, financial, and competitive challenges. Understanding these risks is essential for effective planning. This section provides al list of things to consider to find the right market and grow your business.
- Make Sure to Understand The Market and Cultural Differences: Each culture has unique norms and values that can significantly impact a company’s strategy. For example, differences in social structure, political and economic philosophies, and religion can impact how products are perceived and adopted in the market. Cultural differences can also play a big role in how you decide to enter a different market. Whether you choose similarities or differences in culture can really affect your entry strategy. For instance, if you are a German company, you might establish a factory in Austria due to cultural similarities but opt for partnerships or strategic alliances when entering Asia due to significant cultural differences.
- Regulatory and Legal Barriers: Dealing with a bunch of rules and tariffs and following all the legal stuff can be a real pain and expensive, too. Different places have their own laws and regulations, which can really affect how businesses operate in different markets. The PESTEL Model shows how legal and political factors are connected to other major environmental issues. When one thing changes, it can mess with everything else, making it tough to keep up with all the rules and regulations.
- Financial Risks: The upfront costs for research, marketing, distribution, and product development adaptation can be pretty high. If the entry strategy doesn’t pay off as expected, the financial risk goes up.
- Increased Competition: In new markets, you’ll often find local competitors with strong existing customer loyalty and market know-how. To compete with them, you might need to get aggressive with your marketing and pricing strategies. Understanding how customers behave and make decisions is crucial, as cultural factors can have a big influence on these aspects.
- Supply Chain and Logistics Issues: Setting up a solid supply chain in different markets can be a real hassle, especially in areas with poor infrastructure. Delays and hiccups can cause troubles with product availability and make customers unhappy.
- Operational Challenges: Creating and handling new operational processes, like hiring and training local staff, can be tough. Differences in work ethics and management styles can make things even trickier. It’s important to grasp the local work culture to avoid clashes and improve teamwork.
- Brand Dilution: Expanding too quickly into lots of different markets might water down the brand and take the focus away from the main markets. If the brand messages are different in each market, this can confuse customers and weaken the brand identity.
- Currency Fluctuations: Changes in exchange rates can impact a company’s profits in global markets. Pricing strategies must take these fluctuations into account to stay competitive and keep profits up.
How to Successfully Enter a New Market?
When you’re entering a new market, it’s crucial to really get who you’re targeting and understand what’s going on in the market overall.
It is a must to conduct market research to get the insights you need to make smart choices.
Using different tools and techniques can help you figure out the market potential, spot opportunities, and manage any risks.
In the next section, we’ll review some top-notch tools and techniques for conducting thorough research to ensure a successful new market entry.
Tools and Techniques for Effective Market Research
- Surveys and Questionnaires: You can use surveys to gather data on customers’ preferences, behaviour, and expectations. Different online platforms have made it easy to create and send surveys.
- Focus Groups: Conduct focus groups to gain qualitative insights into customer attitudes and perceptions. This method helps understand the emotional and psychological factors influencing purchasing decisions.
- Competitor Analysis: Check out tools like SEMrush and Ahrefs to learn about your competitors’ online presence, keyword strategies, and content performance. This can help you spot gaps and opportunities in the market.
- Market Segmentation: To make sure your market development plans hit the mark, you need to divide the market into different groups based on categories like demographics, psychographics, and geography. You can use customer data and analytics tools to do this effectively.
- Review Analysis: Keep an eye on e-commerce platforms using review manager tools like gominga to check out what your competitors are offering. This way, you can see the pros and cons of their products or services in real-time, giving you valuable insights into the market.
- Customer Interviews: Interview potential customers in depth to gather detailed feedback and uncover any hidden needs and pain points.
- Industry Reports and Market Studies: Check out industry reports and market trend studies from trusted sources like Statista to really understand what’s happening in the market, where the trends are heading, and who has more market share.
“Through the gominga software solution, the manufacturer receives, among other things, structured information about how its own products reach customers, how the performance develops after the market launch, which questions are frequently asked and how satisfied the customers are – not only on marketplaces, but also on other relevant customer touchpoints such as its own webshop.”
— Marcus Nessler, Head of Customer Experience, Samsung
