A universal truth about businesses is that every business hopes to conquer its market. In fact, this is the sole purpose of going into business for many people—to conquer a particular market. However, business owners who plan to expand into or explore new markets need to consider a range of crucial factors. This is because competition, partnerships, clients, customer preferences, and the business environment are key players in every market entry process.
Any business owner should know market entry strategies are essential blueprints for expansion. This is because they provide a clear roadmap of how to enter the international market. So, understanding market entry strategies and their differences can help you decide which strategy offers the most benefits to your business.
In this article, we’ll explore key facts about effective market entry strategies, including what they are and why you need them. We’ll also take a step further to discuss the advantages they provide for your business. Stay with us!
What are Market Entry Strategies?
Market entry strategies are methods organizations use to plan, distribute, and deliver their goods or services to international markets. The cost and level of a company’s control over distribution can vary depending on the strategy it chooses. However, most companies usually choose a strategy based on certain factors, like the type of product they sell, the value of the product, and whether shipping requires special handling procedures. Companies may also consider their current competition and consumer needs before choosing a market entry strategy.
It is true that most businesses successfully operate in their local markets. However, research shows that increased sales, global recognition, and business sustainability are added benefits if they can effectively navigate new market entry.
As a result, businesses are expected to understand and follow through with the various established market entry solutions.
Steps in Market Entry
Before deciding to expand your business into international markets, there are certain requirements to follow to ensure a smooth transition. These requirements are summarized in the following steps:
The Exploratory Phase
This is the point where you are concerned with pinpointing new investment trends in a potential market and understanding the potential business opportunities therein.
Consequently, this phase of market entry focuses on the following key aspects:
- Risk scoring and benchmarking
- Identifying potential business growth opportunities
- Measuring industry performance
- Collection and comparison of relevant industry data
- Analyze relevant political and economic trends
This phase is crucial to market entry because it provides relevant information that guides the entire market entry process. In addition, proper exploration of a potential market guides the decision on the market entry strategy to follow.
The exploratory phase is designed for one purpose: To help you select the right market.
Pre-market Entry
This phase involves the deeper analysis of a specific market to measure the opportunity, competition, risks, and projected rewards.
At this point, businesses are focused on:
- Identifying market potential
- Recognizing key stakeholders
- Mapping economic and industry development scenarios for the potential market
- Pitching to local stakeholders and potential investors
In the pre-entry phase, recognizing and utilizing key stakeholders increases your chances of market entry success.
The Entry Phase
The entry phase typically involves accessing potential local business partners, stakeholders, and investors. It includes:
- Developing a reasonable pricing policy
- Double-checking potential partners, investors, and relevant stakeholders
- Establishing business operations in the new market
Post Entry Phase
Once you’ve completed the stages mentioned above, your business can enter the post-entry phase. This stage considers new growth opportunities and managing unexpected turns, crises, or challenges.
Generally, the post-entry phase involves:
- Analysis of potential opportunities in a larger market
- Improving interpersonal relations with relevant local stakeholders and market key players
- Navigating political, religious, security, and economic challenges.
Foreign Market Entry Strategies
What is the best market entry strategy for your business? Keep reading to explore your options.
Exporting
Exporting involves selling your products to foreign countries. You can use direct exporting, which involves selling your products in a foreign country without third-party involvement. Alternatively, you may also export indirectly by using the services of agents such as international distributors.
Piggybacking
As the name implies, piggybacking implies asking other businesses whether you can add your product to their overseas inventory. If your company and an international agree to this arrangement, then both parties can share the profits for each sale.
Countertrade
This is a common form of indirect international marketing. It functions as a barter system in which companies trade each other’s goods instead of offering their products for sale. Countertrading is a cost-effective choice for many businesses because the practice may exempt them from import quotas.
Joint Ventures
One way to minimize the risk of entering an international market is to create joint ventures with other companies planning to sell in the same marketplace. A joint venture functions like a large, independent company rather than a combination of two smaller companies. Hence, they have the potential to earn more revenue than the individual companies.
This type of market entry strategy carries the risk of imbalanced company involvement, but both companies can work together to establish fair processes.
Franchising
A franchise is a chain retail company where an individual or group buyer pays for the right to manage company branches on behalf of the company.
Franchising as a market entry strategy usually requires a strong brand identity. This is because consumers in your new target market need to know what you offer and why they should buy it.
The Changera Advantage
Running a domestic business has its challenges, but exploring an international market has even more peculiarities. If you don’t have the proper resources, you can encounter a lot of challenges that will hinder your growth in the international market.
One common problem that business owners face when carrying out business overseas is payment problems. Fortunately, Changera has provided a lasting solution to this problem so your business can reach the greatest heights.
Here’s a summary of how Changera Business is helping businesses all over the world. With Changera Business, you can:
- Build a global team of experts that you can pay for seamlessly.
- Pay remote workers from everywhere at any time.
- Send and receive payments all over the world using your Changera Business account.
- Pay statutory disbursements.
What else do you need to know? Open a Changera business account today to take your business to the next level!
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