How to Execute a Successful Market Entry Strategy
Every now and then, organisations take the decision to spread their entrepreneurial tentacles to new territories as a way to expand their business operations and gain more market share.
The resolve to diversify or broaden their market base in a new country or region is not one that should be taken on impulse or based on the experience of another company; rather, it should be premised on careful planning and research.
What is a Market Entry Strategy?
In simple terms, a market entry strategy refers to a detailed plan of how to successfully berth and run a profitable business in a new region.
It involves conducting in-depth research into the potential host market with a view to mapping out a way to key into the opportunities and surmounting the challenges there.
Your market strategy must take the size of the market, trends, competition and regulatory policies of the host environment into consideration in order to develop the best plan of action for entry.
Timing your Market Entry
The preparation and implementation of a market entry strategy can take between six to 18 months depending on factors such as:
- The readiness of the right product or service for the new market
- Understanding of the distribution channels
- Availability of the right strategic partner
- Ability to align goals with that of stakeholders
What to Consider When Developing your Market Entry Strategy
Define your Goals
What do you want to achieve by making an incursion into a new market?
Are you looking to generate more revenue, gain recognition as an international company or explore a market that appears to be accommodating to companies in your line of business?
A thorough understanding of the goals and objectives of your expansion drive will inform the kind of strategy you should adopt.
Keep this goal in mind as you develop your strategy to align both.
Conduct thorough research
Expanding into an unfamiliar region without first understanding its context is like an amateur swimmer diving into the deep end of a pool; chances are high that they would drown.
The importance of research to successful market entry cannot be overemphasised as it gives insight into the right strategy to adopt.
Aside from online research, pay a visit to the country or region to get a first-hand feel of the place.
Be aware of the culture, language and political circumstances of your potential host environment.
Research the competition to know what they are doing right and wrong and how you can explore their deficiencies to win customers to your side.
Also, look out for market entry service providers who have the expertise and experience to grow your business and effectively scale your operations.
When searching for reliable service providers, you can leverage platforms that connect brands with agencies like DesignRush, they can help you find the best professional agencies, categorized by their areas of expertise.
Determine your Mode of Entry
There are a variety of ways to enter a new market. However, it’s important to identify the best mode of entry for your business.
Here are a few market entry methods to explore:
- Franchising: Operating under an established company’s business name can be a better option for a new brand in an untested space. You can also consider being the franchiser who allows another brand in the new country to adopt its name. This strategy demands less capital and allows for easier expansion.
- Exporting: Exportation is a cost-effective way to register the presence of a business into a new market. You may choose to set up an export company or have a local distributor to get your product to end-users.
- Joint Venture: Striking a partnership with a firm who already have a solid base in the region you are looking to do business in is also an effective strategy to get up and running in the shortest time possible. With your partner’s experience and expertise in the new market, you are likely to surmount the usual challenges setting up in a strange clime present.
- Licensing: Seek out a business with a solid base in the host region and offer them your license to operate under a license agreement while you reap royalties from the use of your brand name. Licensing paves way for big companies to expand into new markets through local players.
- Greenfield: This is a capital intensive market entry strategy that gives a company full control over its operations. With greenfield, the stakes are high, therefore, intending business investors must be ready to take on all the risks and rewards associated with it.
Understand the Cost Implication
One of the first things that should come to mind when you are making the decision to enter a new market is cost.
What are the financial implications and how are you going to navigate them?
Will you need to take a loan to execute your venture?
Are you looking to get insurance to ensure your capital is secure?
Develop a Strategy Document
After taking care of the aforementioned, it’s now time to map out a blueprint that clearly details your step-by-step plan and how you will execute them. This will be subject to amendment as time goes on.
Are you looking for a market entry partner that will help you effectively scale your operations into Nigeria, then you should talk to us!
At Workforce Group, we deploy our internal capabilities to provide viable solutions to your market entry concerns and challenges.