Posted on : 2024-02-09 02:56:34
Article : Good evening, Friday Management TASK 280- To reach new vast potential customers and to grow revenues, business expansion is the answer in spite of difficult process filled with complications.
It’s a natural phenomenon that companies enter new markets in hopes of increasing revenues. Most often, this happens when they find it difficult to meet revenue targets in their current market(s). However, successfully entering new markets is a far more difficult task to achieve than it may seem. Companies tend to severely underestimate the time and cost required to generate adequate sales in new markets. In fact, many have bailed out of new markets after sinking significant money without seeing the returns they expected. Does this mean that entering new markets is a bad idea? No.
Entering a new market can lead to a massive boost to sales, brand strength and long-term profits. But there’s more to a market entry strategy than great products or services. Understanding the local market, its distribution channels, culture, economic and social trends through a market research-driven due diligence process is crucial. And sometimes the most valuable insight is the hidden reason why you shouldn’t proceed. Over the past 40 years, globalisation has redefined what it is to be an international brand. For decades, a handful of dominant players in markets such as food and drink (driven by marketing prowess) or automotive (reliant on economies of scale) had been able to enter new markets in ways that most businesses simply couldn’t imagine.
The rapid growth of global trade capacity, and particularly the ubiquity of the internet, has levelled the playing field. Today a business in Bolton has myriad options for selling in Beijing; an Australian specialist retailer has lots of ways into the Austrian market. But the process of choosing which markets to enter, how and why remains fraught with danger. The rewards of opening up a new market are potentially great. On the other hand, the cost can be significant, and the list of powerful global brands that have failed to successfully enter new markets is a long. Various factors are to be considered like economic and social dimensions, competition from local companies, the quirks of regional distribution channels, cultural mismatches and much more. That means undertaking a market-research-driven due diligence project before entering a new market is a must and Every organisation will have its own reasons.
A crucial first step in investigating markets for entry is to analyse why a brand, product or service is successful in its existing markets. How is it used? Who is the type of people that love it? What are those customers’ attitudes across different domains? What role does it play in their lives – and why? The next step is to look for markets where groups like this already exist. A good starting point can be detailed desk research.
What motivates companies to investigate entering a new market? Exploring them in detail is a useful first step in defining the later market entry strategy. Post your suggestive comments and your brand experiences of new market entries- in our comments box or mail to us directly. Our elaborate means and ways of new markets entry will be posted on our Good Morning Monday Management solution post on 12th Feb 2024.
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