Businesses are often looking for international expansion. Often the decision is driven by a desire for greater profits, lower manufacturing costs, tapping into a lucrative market opportunity and in general diversification of assets and business risk. Everyday more and more number of businesses are entering new markets and creating a more interconnected world.
Market Entry : Is there a one size fit all approach?
There is no magical ‘one size fit all approach’ for entering a new market that could be applied to any market irrespective of geography, market maturity, demographics and existing competition.
Whenever a business decides to enter a new market, they need to take into consideration a variety of factors before they actually start selling their product.
For instance, if you’re thinking about starting an online technology market place, you can either think of it as a ‘one stop’ shop for everything or you can be specific and focus on a niche technology space such a wearable devices.
If you venture out in the first space, then you’d be competing with the likes of Amazon and Flipkart (India). If you choose the latter, then you might be able to create a space for niche audiences who are only looking for buying a wearable device with very specific requirements.
Now obviously, this market may not be having a huge opportunity upfront but depending on how you implement it, this might actually be a good strategy that prevents a direct competition from Amazon (for the time being).
Who knows, there might be some people across the world, interested in just buying a wearable device for fitness and need very personalised advice before making an investment. But those few thousand people are ready to become your raving fans and customers.
In order to enter a new market, a firm must make the following considerations:
- Focus on your niche: Find out the customers that are currently under served by the existing players in the market. These are the customers who would probably become the first customers of your company and would be providing valuable feedback on the product. The rise of digital age has made it possible to target specific segments of the market with a laser sharp approach.
- Add your twist: In most cases, you don’t need to re-invent the wheel when it comes to market entry. The existing business models adopted by the incumbents can turn out to be a great starting point for your firm. Think of the ways you can “add your twist” to their business models and outperform them to serve your niche audience.
- Always bridge the value gap: Whatever small segment of the customer you are serving, it is extremely important that you are always bridging the value gap through your product/service offering. The customers should feel that you are offering more value for money than the existing competition. Often times the existing dominant market players don’t offer value to all the segments they serve. This might be due to their business model or focus on specific customer segments which leads to overlooking the other customer segments.
- Listen to customers: Even if you’re a mature company, when you are entering a new market, you’re still treated as a new entrant by the customers. The trust in your product is still low and as a firm you should listen to what your customer’s are saying about your product or service. Every market is different as the customer taste and preferences differ across markets. Customer feedback serves as a vital guiding tool to improve your understanding of the local market and make necessary changes to your offering.