New market entry
New market entry
Market entry is a big step for a company’s growth. Companies want to increase their sales and profits. They can achieve this by expanding new markets into other countries. New market entry is the process of opening current products for new markets. It is not only profitable for the business though as well as for the country. More work will be available and improved technology.
It is furthermore a step to go into international business. In many cases, it is a step for future development. Companies need to start thinking in a much more international way and if there is a need to hire different kinds of people for international business. There are many more challenges in international business, but it moreover gives a lot for companies; for instance, companies need to think about old things in a new way.
Market Research & Partnership
Researching where new markets a company should enter is a crucial step. By researching you can get a clearer view of the process of entering. The company needs a more strategic and disciplined process to introduce the products and services into new markets. Opportunities exist in the new markets for the company’s current products and services. For market research, it’s necessary to use a local consulting company that knows the specialties of this certain country. Local knowledge in this case is more vital than knowledge of the product. Market research is a crucial part of entering a new market because of the fact that you need comprehensive and realistic research results. Another part of researching is to find out suitable dealers for the products or a cooperation partner.
When a suitable dealer/cooperation partner has been, found they need to make a future plan and sale of goals. You need to have a sales & marketing strategy to achieve this sales target. Strategic thinking requires business case inputs and provides you with prioritization. The first thing is to think about how to get inside the market. What kind of marketing campaigns and what are the marketing channels for the new product. Knowing your target audience will lead to the right advertisement channel along the lines of social media advertising, television, radio, direct mail, website, and outdoor marketing.
Cooperation partner education
Another essential step, even though your products are good is not enough for the reason that it is then up to your dealer or cooperation partner what kind of success you will have in your chosen country. That is why your new partner must be aligned, meaning they have to invest money into the project. They need to be educated about the product and your new partner needs to know how to sell and market this product as well as knowing how to support the product. Depending on the product you need to have customer and product support. Sometimes cultural differences may create some challenges. You must have a main contact person in the company that takes care of the daily business.
Generate customer and business insights
It is important to understand your customers, markets, and/or competitors. Check and update your evaluation, assemble information, and generate insights about customer’s markets and competitors.
Defining market opportunities and assessing insights from evaluation to initiate market opportunities. Define and score market opportunities and prioritize and approve market opportunities. Defining solutions, determining risk and impact of potential solutions. New products require expenditures for capital assets. Recognize expense fully in one accounting period (year).
Market entry evaluation
One of the last few steps in expanding into a new market is evaluating carefully what you have done and the outcomes. Analyzing your progress and results by for example customer feedback, customer satisfaction, and profitability. Another way to collect feedback is from your employees and customers to identify your SWOT (strengths, weaknesses, opportunities & threats). The idea of improving should always be open to expanding the chances of success in your market entry.
Risks of market entry
There will always be different risks when entering a new market. Your company’s structure can play a big role in your management. Having an unclear vision and not communicating with your team clearly enough. When entering a new market you need financial resources, not having enough of those resources can be a problem. Not dealing with the company’s financial problems quickly enough it can lead to company failure. Entering a new market is not cheap, costs most likely will be higher than expected. Export and import costs, in overseas markets involve costs associated with the importing. The need to conduct risk assessments and analyze the impact of each risk is crucial. (Kadence, 2022)
Risks that might not be related to your company but still are important to be aware of is politics. Politics in other parts of the world are different. Be educated on the certain countries’ political risks before entering a new market. Cultural differences can also be a big risk. Introducing your company and products to a new culture you must be aware that it might affect the way you market your product or service. (Kadence, 2022)
It is very important to have a clear marketing plan and strategy before entering a new market. Long process investment, you must have money to invest. In the first few years most likely you will not have great results. You will be investing more money than receiving but later you will start to make profit.
The majority of companies might not fit into entering a new market, it is not a cheap process and small companies most likely cannot afford to expand to other countries.
Key points to be aware of before entering a new market, know which market to enter, why, and when. Be aware of your competitors & who are your potential future customers.
Pekkanen, V. (2023) Key customer manager. John Deere.
Laakso, M. (2023). Sales & support manager. John Deere.