Written by Natalia Szczucka, Consultant at ConQuest Consulting
A foreign market's potential is discovered by undertaking the necessary marketing research and planning and then implementation that will help to be successful. A new market entry is a fascinating opportunity for companies that are seeking ways to grow and expand. While there are several strategies to grow a business, companies that provide globally relevant offerings and unique value propositions should strongly consider growth by entering new markets.
Choose a market
While many markets can be great for your product, you should start your internationalisation process in small steps. Whether it is one country or a group of highly similar countries (e.g., Scandinavia), the first thing you need to do is research. Research is genuinely essential for successful market entry and will also lay the basis for designing your marketing strategy afterwards. You have to answer many questions such as: What are the advantages and disadvantages of this market? How big is that market, and is it growing? Who are the leading players in the market?
Decide when to step on it
This is important as your competitors may have similar plans. You have to watch it closely and analyze its actions. Maybe you will even see something valuable that is also worth using in your company and strategy. Entering competition in a new market can also prove profitability and room for new entrants. By following your competitors, if they are successful, you will know that there is a market for your business, and it is much more likely that local businesses will want to work with you. However, you run the risk of local customers becoming loyal to your competitors' brand and not buying from another company.
Choose a mode to enter a new market
Export is characterized only by the delivery of one's product to the foreign market. It is the easiest and least risky option for companies entering unfamiliar areas. Indirect export requires the help of a third party participating in the entire process. In contrast, direct export involves delivering the product by the company that produced it to the buying company.
Investments are based on internalization. Unlike exports, they require a large financial outlay to expand their company's business to a new market where the same products will be produced in the future as on the domestic market.
The most frequently chosen option is something between the previous two. The light risk associated with large investments combined with some exports gives people what they are looking for when creating a strategy and then entering new markets.
Choose a legal form
Licensing is an agreement between a company on the home market and a foreign company on the market you want to enter. It allows the licensee to use your technology or brand in return for a license fee.
Franchising is a form of licensing, also based on license fees. The main difference between these is that you can have much more control over what the franchisee "does" to your name and products as a franchisor.
In recent years, companies entering new markets have very often chosen the options of the management contract. The management governs the foreign company for a specified period in exchange for, e.g. Percentage of Sales. Even if you can't develop your own business in this mode, you can gain a unique insight into the foreign market and then enter it with confidence.
Contract Manufacturing is the outsourcing of manufacturing operations to a cheaper market. That is why so many products are made in China - because of the low price.
Choose a partner
The most important thing is that your partner is financially stable. Nothing spoils the joy of entering a new market like a partner's bankruptcy. It is also essential to choose someone who already has an action strategy developed and sticks to it. This proves that the person you have selected is task-oriented and sticks to established issues, translating into your confidence in them in the future.
This article is part of an exchange series of articles started in collaboration between WBC UK and its Polish partner ConQuest Consulting. It has been written and produced by ConQuest.
References & Bibliography