Entering a foreign market is an exciting time, as it means your business is growing and continuing to become more successful. However, entering a new market can involve a lot of hard work and research, making sure your business has the best chance of reaching its goals. Many businesses have found ongoing achievements by expanding into foreign markets, which brings with it a whole host of challenges such as understanding the local culture and business practices.
Choosing the right market entry strategy can give you the best possible start when it comes to entering a new market. However, with so many different strategies available, how do you choose the one most suited to your business? Here we offer some market entry support to help you get started.
Set your goals first.
There are many steps to take before you begin the process of market entry, including planning and analysis. Before anything else, take the time to understand why you want to enter a new market, and understand how successful you may be before you begin.
What are you hoping to achieve by expanding your business? What product or service are you offering, and how will that be received by your target audience in the new market? Consider what results you expect to achieve, such as your targeted level of sales, and how you’ll get there.
Research the market.
Before you can choose a market entry strategy, you must first understand more about your target market. Collect key information such as the size of the market, consumer trends and what competition you may face. You should also consider your business’ unique value proposition and what you might add to the market that is different.
It’s important to be aware of any trade or regulatory considerations in your target market, and any other legalities that you need to follow.
Consider your market entry strategy.
Choosing a market entry strategy is dependent on which will suit your target market best, and which will help you to achieve your goals. There are a number of market entry strategies to consider, each of which have their own benefits. Here are just some of them.
Exporting market strategies follow two models, which are direct and indirect exporting. Direct exporting means you sell directly to that market, while indirect exporting means you appoint third parties to represent your business and products.
Direct exporting can take much more work and involvement from your end, although it does mean you can experience higher profit margins and direct customer contact. On the other hand, indirect exporting can result in better industry connections and few staff required.
Licensing and franchising
Licensing means you transfer the rights to a product or service to another party, giving them a legal right to use your company name or other intellectual property. They will sell your products and you will receive royalties or other payment.
Franchising is similar in that your business model can be easily transferred to other markets.
This is one of the most challenging but rewarding market entry strategies. A greenfield investment involves buying or lease land and facilities, and operating the business in a foreign market. It requires you to understand government regulations, local business environment, transportation costs and access to technology and labour.
It’s important to choose the market entry method that works for your business and allows you to achieve your goals. Consider using a consultant who can help you analyse your business’ potential within a new market.