By Lulu Helina Mulya & Krishnawidya
If you are a business owner looking to expand your business, you should consider market entry as it is a critical aspect of most cases of business growth. Entering new markets can help you unlock a wide range of benefits and allows you to reach a broader customer base, which in turn, can lead to increased revenue, profits, and market position.
While entering a new market can be a big window of opportunity for businesses to grow, studies have shown that only around 40% to 60% of businesses entering a new market achieve their desired level of success, while the remaining face various degrees of challenges or even failure. Ultimately, market entry can be tricky to get right, and it’s crucial for businesses to carefully plan and execute their strategies to maximize chance of success. In this article, we will explore the dos and don’ts of market entry strategy to help businesses develop a successful plan.
Do: Conduct a thorough market research and analysis
When doing market entry, conducting a thorough market research analysis is the first and most crucial step for businesses. This first step involves gathering and analysing data alongside all the information related to the market dynamics, customer needs, and competition in the target market. Researching your market can also help you assess your customers, which can help you tailor your products, services, and marketing messages to better meet the local demand.
To identify your target market, conduct market research to gather information about potential customers. This research can include surveys, focus groups, and interviews with industry experts.
Don’t: Ignore the local competition or regulatory requirements
Sometimes overlooked, ignoring local competition or regulatory requirements can be a significant pitfall for businesses entering a new market. In short, failing to understand the competitive landscape and regulatory environment at a target market can lead to costly mistakes and lost opportunities. Therefore, it is crucial for businesses to analyze local competition and regulatory requirements to develop a well-informed market entry strategy that addresses potential risks and maximizes the chances of success.
Do: Identify and leverage your competitive advantage
When entering a new market, businesses should identify and leverage their competitive advantages which can include unique value proposition, brand reputation, operational efficiency, or any other strengths that will differentiate them from other competitors. By leveraging these competitive advantages, businesses can establish a strong market position and gain a competitive edge in the market. Identifying the business’ strengths and weaknesses is a great initial step to develop a strategy that maximizes competitive advantages in order to achieve success in the new market.
Don’t: Neglect building local relationships
For businesses to thrive sustainably in a new market, it’s essential to establish strong relationships with local stakeholders, which can include customers, suppliers, regulators, and other key players in the market. These relationships need to be established in order to build trust and credibility which might take time and effort but it is certainly crucial for the business’ long-term success. When businesses fail to establish solid relationships with local stakeholders, it can lead to lost opportunities and ultimately, failure to establish a foothold in the new market. On the other hand, building a strong local network and partnerships can help businesses to navigate the local regulatory and cultural landscape more smoothly.
Do: Localize your marketing strategy
Marketing is a critical component of any market entry strategy. It is essential to tailor your marketing strategy to the target market to ensure its effectiveness. Localizing your marketing strategy involves understanding the local culture, language, and customs.
Businesses should work with local marketing experts to create a marketing strategy that resonates with the target market. This may include adapting the product packaging, changing the product name, and creating marketing campaigns that reflect the local culture.
Don’t: Rush the market entry process
Rushing the market entry process is a common mistake that businesses make when expanding to a new market. Entering a new market requires careful planning and execution. Failing to do so can lead to costly mistakes that can negatively impact the business’s reputation and financial performance.
To avoid rushing the market entry process, businesses should create a detailed plan that outlines each step of the process. The plan should include a timeline and a budget to ensure that the process is executed efficiently.
In conclusion, entering a new market can be quite a tricky process but also a rewarding opportunity for businesses looking to expand their operations. A successful market entry strategy requires careful planning and execution, and by following these dos and don’ts, businesses can increase their chances of success when expanding into new markets. However, keep in mind that there are specific factors and strategies for market entry that may vary depending on your business and the market you are entering, and it is crucial to seek advice from experts, local partners, or professional consultants to develop a tailored approach that fits circumstances that are unique to you.
Ravenry is a research consultant that works on giving you relevant insights so you can focus on making well-informed business decisions. Book a call and get your research done today.