CONCEPT OF MARKET ENTRY

Module IV

International Marketing Strategies

 MARKET ENTRY STRATEGY

 Market entry strategies provide businesses with a roadmap

to enter into international markets. Since there are many

m e t h o d s c o m p a n i e s c a n u s e t o s e l l t h e i r g o o d s g l o b a l l y,

they will choose the best approach based on their goals and

target market. Understanding market entry strategies and

their differences can help you decide which strategy offers

t h e m o s t b e n e f i t s t o y o u r c o m p a n y.
CONCEPT OF MARKET ENTRY

M A R K E T E N T RY D E F I N E D

 Market entry strategy is a plan to expand the visibility and

distribution of a product or service to a new market. Market

entry research helps brands to expand into new domestic or

international markets where the competitive, legal, political

or cultural landscape might be less known.

CONCEPT OF MARKET ENTRY

M A R K E T E N T RY D E F I N E D

 Market entry strategy is a planned distribution and delivery

method of goods or services to a new target market. In the

import and export of services, it refers to the creation,

establishment, and management of contracts in a foreign

c o u n t r y.
HOW DO YOU ENTER A NEW POTENTIAL MARKET?

 Expanding your brand into new markets allows you to reach

potentially vast numbers of new customers and grow your

r e v e n u e m a s s i v e l y. H o w e v e r, t h e p r o c e s s c a n b e c o m p l e x

and filled with complications.

HOW DO YOU ENTER A NEW POTENTIAL MARKET?

A market entry strategy maximizes your chances of success

when moving into a new market.

 Market entry research is the path to understanding a new

market. It helps brands identify different success factors,

reveal potential challenges, and discover hidden potential

opportunities.
 WHY MOVE TO A NEW MARKET?

 First up, why should you consider moving to a new market

in the first place?

 I t ’s challenging and expensive, so what are the reasons that

make it worthwhile.
 WHY MOVE TO A NEW MARKET?

 Yo u ’ l l g a i n m o r e c u s t o m e r s a n d m a k e m o r e m o n e y –

 The number one reason to consider new markets is to

grow your business and increase revenue by selling more

products to more customers.

 WHY MOVE TO A NEW MARKET?

 There might be no more opportunities for growth in your

home market – If you’ve maxed out what your local

market is capable of in terms of revenue, expanding to

n e w m a r k e t s m a y b e t h e o n l y w a y t o g r o w.
 WHY MOVE TO A NEW MARKET?

 Yo u ’ l l reduce risk by diversifying your business –

 If one market suffers for whatever reason, you’ll have

others to keep you going.

 D O M E S T I C M A R K E T S V S I N T E R N AT I O N A L M A R K E T S

 Are you planning to enter a new domestic market or

take your products overseas to sell in a foreign

country? The approach for each of these will be very

different.
 DOMESTIC MARKETS

 Ty p i c a l l y, this will be much easier than entering an

overseas market. The culture will be the same,

e v e r y t h i n g w i l l b e g e o g r a p h i c a l l y c l o s e r, a n d t h i n g s

will likely be very similar to your existing markets.

 INTERNATIONAL MARKETS

 Global expansion is where things become more complicated.

 Yo u ’ l l have to factor in several differences in how you

currently run your business. These include:

 Cultural differences

 Administrative differences

 Economic differences

 Logistical challenges involved in transporting goods abroad

 Things to consider before entering International markets

 B e f o r e y o u e n t e r a n y n e w m a r k e t , i t ’s c r u c i a l t o t a k e

some time to confirm whether you can afford the move.

 Can you afford the costs of exporting, working with

intermediaries, tax, and all the other expenses involved?

 And what proportion of the market can you realistically

expect to be able to serve?

 Things to consider before entering International markets

 Yo u must also consider if the product or service will

work in your intended market.

 Market research (both online and offline) plays an

important role here — ensuring demand for your

product justifies the export cost.

 Risks of entering new markets

 There are also numerous risks involved in entering a

new market, including:

 Country risks, like the possibility of political unrest,

sudden changes, or financial issues that could impact

your business.
 Risks of entering new markets

 Weather u n p r e d i c t a b i l i t y. Are you moving into a

market where natural disasters and weather

conditions could cause damage to your facilities and

cost money?.
 Different market entry strategies

 Direct exporting

 Indirect exporting

 Indirect exporting with buying agents

 Indirect exporting using distributors

 Indirect exporting through the management and

trading companies
 Different market entry strategies

 Indirect exporting through piggybacking

 Producing products in the target market

 Franchising / Licensing

 Piggybacking

 Joint ventures

 Company ownership
 Different market entry strategies

 Outsourcing

 Greenfield investments

 Tu r n k e y p r o j e c t s
 Direct Exporting

 Direct exporting is where you ship your

products to the new market d i r e c t l y. Yo u ’ l l

have to handle all aspects of the process

i n d e p e n d e n t l y, f r o m t r a n s p o r t t o p a y m e n t s t o

operations in the new market.

 Direct Exporting

 Yo u ’ l l need to create an exporting

infrastructure, train employees, and make and

receive international payments, among many other

challenging tasks.
 Direct Exporting

 On the plus side, this approach maximizes your

profits as you don’t need to pay any third parties.

Yo u ’ l l a l s o h a v e c o m p l e t e c o n t r o l o v e r y o u r s a l e s

and marketing processes.

 Indirect exporting

 Indirectly exporting involves working with an

i n t e r m e d i a r y.
 Indirect exporting with buying agents

 Buying agents are representatives of foreign companies that

w a n t t o b u y y o u r p r o d u c t s . Yo u ’ l l w o r k t h r o u g h t h e m w h e n s e l l i n g

your products to your new market.

T h e y ’ r e u s u a l l y p a i d b y c o m m i s s i o n a n d w i l l t r y t o n e g o t i a t e t h e

lowest possible price. Sometimes, buying agents are government

agencies.
 Indirect exporting using Distributors

 Yo u c a n s e l l y o u r p r o d u c t d i r e c t l y t o d i s t r i b u t o r s

or wholesalers, who will then distribute the product

to retailers.
 Indirect exporting through the
management and trading companies

 Export Management Companies (EMCs) exist to take care of all

your export and sales processes in your new market.

 It’s wo rth takin g some time to research an d fi n d th e co rrect EMC,

as most specialize in a particular market and region. They’ll help

you identify markets, find customers, handle all shipping and

logistics, and more.

 Indirect exporting through piggybacking

 Piggybacking is where you allow another non-competing

company to sell your product. This can work exceptionally well

if the partner company already has a customer base and

distribution infrastructure in your target market.

 Yo u ’ l l g e t i m m e d i a t e a c c e s s t o y o u r n e w m a r k e t b u t f o r a f e e .
 Producing products in the target market

 H o w e v e r, you’ll also need to consider the many challenges in

manufacturing your product abroad, legal issues, costs, possible

risks, and more. Depending on your situation, this could be a good

option.
 Franchising / Licensing

 While franchising is often associated with fast food or quick-serve

restaurants, it can successfully aid expansion in many different

categories.

 Franchising is where a semi-independent business owner (the

franchisee) pays fees and royalties to the franchisor to use a

co mp an y’s t rad emark an d sel l i ts p ro d u ct s o r servi ces.

 Piggybacking

 If your company has contacts who work for organizations that

currently sell products overseas, you may want to consider

piggybacking. This market entry strategy involves asking other

businesses whether you can add your product to their overseas

i n v e n t o r y. I f y o u r c o m p a n y a n d a n i n t e r n a t i o n a l c o m p a n y a g r e e t o t h i s

arrangement, both parties share the profit for each sale. Yo u r

company can also manage the risk of selling overseas by allowing its

partner to handle international marketing while your company focuses

on domestic retail.
 Joint ventures

 Some companies attempt to minimize the risk of entering an

international market by creating joint ventures with other companies

that plan to sell in the global marketplace. Since joint ventures often

function like large, independent companies rather than a combination

of two smaller companies, they have the potential to earn more

revenue than individual companies. This market entry strategy carries

the risk of an imbalance in company involvement, but both parties can

work together to establish fair processes and help prevent this issue.
 Company ownership

 If your company plans to sell a product internationally without

managing the shipment and distribution of the goods you produce,

you might consider purchasing an existing company in the country in

which you want to do business. Owning a company established in

your international market gives your organization credibility as a

local business, which can help boost sales. Company ownership costs

more than most market entry strategies, but it has the potential to

lead to a high ROI.

 Outsourcing

 Outsourcing involves hiring another company to manage certain

a s p e c t s o f b u s i n e s s o p e r a t i o n s f o r y o u r c o m p a n y. A s a m a r k e t e n t r y

s t r a t e g y, i t r e f e r s t o m a k i n g a n a g r e e m e n t w i t h a n o t h e r c o m p a n y t o

handle international product sales on your company's behalf.

Companies that choose to outsource may relinquish a certain amount

of control over the sale of their products, but they may justify this

risk with the revenue they save on employment costs

 Greenfield investments

 Greenfield investments are complex market entry strategies that

some companies choose to use. These investments involve buying the

land and resources to build a facility internationally and hiring a staff

to run it. Greenfield investments may subject a company to high risks

and significant costs, but they can also help companies comply with

government regulations in a new market. These investments typically

benefit large, established organizations as opposed to new

enterprises.
 Turnkey projects

 Tu r n k e y p r o j e c t s a p p l y s p e c i f i c a l l y t o c o m p a n i e s t h a t p l a n , d e v e l o p

and construct new buildings for their clients. The term "turnkey"

refers to the idea that the client can simply turn a key in a lock and

e n t e r a f u l l y o p e r a t i o n a l f a c i l i t y. Yo u m i g h t c o n s i d e r t h i s m a r k e t e n t r y

strategy if your clients comprise foreign government agencies.

International financial agencies usually manage arrangements

between companies and their overseas clients to ensure the

companies provide high-quality service and the client pays the full

amount due.
THANK YOU