Posted on : 2024-02-11 19:52:32
Article : Good morning, Monday Management solution for TASK 280- New Markets entry has many dimensions – and no business is too big to skip them.
Remember, successful market entry is about making informed decisions and adapting strategies based on the unique characteristics of each market. Expanding into a new market can be an effective way to leverage companies core business for growth. But it takes a disciplined process to accurately assess the potential of each growth opportunity, because a bad bet can bog down your business. It simply means that companies should know what they are getting into before spending money. They should have a much firmer grasp on the level of investment in money, time, and effort required. In addition, they should have more realistic expectations of how much revenue they can expect and by when.
One of the needs for new markets entry is for band growth. A huge proportion of value in modern enterprises is wrapped up in intangibles. That means increasing enterprise value requires diversification of the brand. Some very strong domestic brands can move into adjacent markets (Dyson, for example, can leverage its reputation for air-moving engineering from vacuums, to hand-dryers, to room fans and even hair straighteners). A select few can jump into non-adjacent categories (Virgin, for example). But opening up a whole new geographic market can establish a brand with many more consumers, boosting its value.
Other need is to introduce new products and or brands in new markets. Once a company has gained significant market share and consumer penetration domestically, it’s easy to see growth stall. Launching new products to address existing customers is costly and high risk. But taking proven products or services to a new market can create fresh upside for growing brands. New markets entry optimises cost effectiveness. As businesses grow, they build up overheads around head office functions. They also build up niche skills and experience in fields such as logistics, legal or financial. These scale well: the more times an organisation can put your experts to work in a new market, the more productive they are. And the more markets they have, the lower the amount each one pays to meet head office costs.
Better ways are to have strategic partnership in identified new markets. Globalisation has meant businesses can easily work with partners in new markets creating new opportunities for blended products and services. Local distributors, for example, might be pathfinders for a brand into a new market demonstrating the potential for a more structured entry into that market. There are plenty of other motivations, often overlapping. Knowing which is driving the decision to explore new markets will help frame the strategy for successfully entering one.
Sometimes brands do have a clear idea from the outset which markets they want to enter. A company producing ceramics which had a light-touch arrangement with an international distributor. They started to notice a significant uptick in orders from Korea which was obviously a strong signal that entering that market could pay dividends. But that also meant understanding why was key to a successful market entry. Closer research revealed that an increase in purchasing power among the country’s middle class had made the designs more attractive, plus online shopping had taken hold and made previously hard-to-get products more visible.
Entering a new market involves different steps, including assessing opportunities, testing concepts, and understanding competitors. Every business, regardless of size, should follow these steps.
For Example: Coca-Cola carefully studies local preferences and cultural nuances before entering new markets, ensuring their products resonate with diverse audiences.
End Point- There are different phases to a market entry subject. You need to seize the opportunity to judge whether it’s worth entering a new market. There ought to be concept testing, especially for new categories or innovations in that market. Many companies focus on competitor analysis when they’re dealing with less well-known rivals. Market entry has many dimensions – and no business is too big to skip them.
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