Finance

Market entry methods that can be adopted by businesses


Growing and intensifying your business, especially in a new market has to do with a lot of work. This has to do with putting different measures in place to reach a large audience, gain brand visibility and equally increase your ROI. The process can be tedious with lots of obstacles and barriers.

Nevertheless, setting a market entry strategy will curb these obstacles and assist to make a huge accomplishment, especially when going into a new market.

Different market entry methods are adopted by different firms entering new markets and they are as follows…

1. Exporting 

An important method of entering a new market is the exportation of goods. This method enables you to penetrate a new market in a go. The best approach to this strategy is to have a local distributor. The best reason for using a local distributor is because they already have their audience, and they are well experienced in the local market. This method is only suitable for companies with products and will not apply to companies with services. The negative impact of this strategy is that local operators will have full control and equally control the decision of the sales.

2. Licensing

This strategy simply means giving full legal conditions to other groups or parties to make use of your company’s name. Under a license agreement, the licensee can produce and sell products or offer services using your company name. In return, you will receive a commission or fee. An example is what e-Commerce named Jumia is currently doing with some brands whereby they will have to place their goods on Jumia’s marketplace and get a commission once a sale is made. Jumia is in partnership with the following brands: Samsung, Apple, Sony Techno, etc. Your company is on the verge of making a huge profit if your licensee performs exceptionally.

The disadvantage of this strategy is that the negative actions of your licensee will have a huge impact on your brand. In that regard, you need to do your background checks very well to be sure you are doing business with a company that will protect your brand’s interest.

3. Franchising

Another method to use is franchising. Franchising is kind of related to licensing, though there are differences between them. Franchising allows a different entity make use of your trademark, trade names, logo, etc., though rules are set on how the franchise can operate. This kind of market entry is very common with big brands like KFC, Mcdonald’s, Domino’s, etc. The advantage of this business is that the franchisor has control of the business, so it is less risky than licensing.

4. Joint venture

In the mention of a joint venture, what comes to one’s mind is a partnership. This partnership can be between your company and one or more organizations. This can also be called co-branding. Having a partner comes with a lot of benefits and it is as follows; Reduction of manufacturing cost, Developing and diffusing technology and they will be able to share insights on the market with you. A good example is airlines, Qatar Airlines, Air China, Air Canada, etc. This method is the best to aid investors to penetrate the new market. And they are more in control of your business than the franchising and licensing method of penetration.

5. Greenfield Investment

The Greenfield method has to do with a company setting up an operation in a foreign country. A greenfield investment is when a company sets up operations in a foreign country This strategy will need more capital investors. A good example is Unilever. Unilever is a British multinational consumer goods company with its headquarters in London, United Kingdom. The company has a presence and is in full operation in different countries. Many emerging markets in these countries support and embrace these foreign investors in their country, and equally, allow them to have full ownership of this company. However, there are some policies that can affect these foreign companies and even hinder their operation in these countries. Some of these policies can be political, environmental, social, and even legal.

In conclusion, companies that want to go into a new market must carry out their research thoroughly to know if any of the strategies fit the process to enable them to have a seamless entry. It is very crucial to understand the business you do, and who your target audience is before making this move. All these will guide the outcome of your entry.



Source link

Related Articles

Leave a Reply

Your email address will not be published. Required fields are marked *

Back to top button