If your company wants to break into a new international market or many markets for that matter, then chances are you’ll be facing some major business decisions. 

What are your Business Objectives? 

You need to start by thinking about your objectives for entering a new market. Do you want increased revenues/profits, brand awareness, business stability, market share, or a potential merger? Only by deciding on your key objective(s) can you start to develop the right strategy. Your decision will also be guided by financial resources, the product lifecycle and the product itself. However, before you decide on your market entry strategy there are many other strategic considerations when it comes to your marketing or business plan. Three of the most important will be: 

• Which country / countries do you choose?
• Targeting which customer segments?
• How to effectively create the right Marketing Mix?

Once you know which market segments you want to attract, what does the tactical go to market plan look like?

Your decisions here will be influenced by the current market – are you one of the first companies to offer this product or a late starter that needs to outshine the competition.

How do I get my products into new markets? 

The decision needs to be made whether to make the products in your own domestic market and ship to the new one(s) or to buy the products in the target market or another cheaper alternative. Don’t forget that distribution, customs and VAT will eat away at profit margins if you decide to ship from home. 

Market entry: Going alone .v. with a partner 

It can definitely be tempting to go it alone and enjoy the fruits of your own success. However, it may be prudent to think about a joint venture, a global partner, or even to buy / merge with a local company. Remember to think about long-term as well as short term.


What market entry strategies should I look at? 

There are a number of market entry strategies that you can utilize but some of the more popular strategies outlined in general business theory are outlined below. The decision that you will adopt is 100% related to your companies specific circumstances. There is no “one size fits all” approach. 

Exporting Strategy
 
This is a strategy where you decide to sell to another country working only from your home base i.e. without any marketing or production overseas. There are many advantages and disadvantages to exporting such as: 

Exporting Advantages:
Increase in sales & profits, an increase in market share, the ability to stabilize any seasonal fluctuations and to grow your company. 

Exporting Disadvantages:
Increased costs for exporting, cash flow – you may need to wait longer for payments, production – you might need to modify your product or packaging and let’s not forget the red tape! Export licenses, Insurance, VAT, and Customs etc.

Franchising Strategy 

If your business is suitable for franchising then it can be an attractive option. Franchising allows you to expand your business without the need for a huge financial investment, basically enabling you to control the risks. 

If you wish to franchise you will still need to do some serious planning to develop a sound plan for growth. This plan needs to take into consideration: speed of growth, geographical development, support services for franchisees, staffing and fee structure, to name but a few of the issues. 

So, is your business suitable for franchising? Your business needs to have certain characteristics if it is to be a successful franchise: 

1. Is it credible? Do you have experienced management, a known brand, and a history of success in your own market? Is your product or service proven to be wanted or needed?
2. Is it unique? Is your product or service different from the competition with a strong USP (unique selling point)?
3. What about ROI? Can your business bring a 15 to 20 percent return on investment? If not then the offering is less attractive to franchisees.
4. Is it teachable? Can you teach someone to run your business in a few weeks? If your business is extremely complicated then it may not be suitable for franchising.


Licensing Strategy
 
Licensing is an agreement that permits a foreign company (the licensee) to use property (i.e., brands, patents, trademarks, and copyrights), technical knowledge and skills, product formulas etc and many more areas from the licensing company (the licensor) for an agreed fee. 

There are many advantages to the licensing approach because it can be done with little initial investment provide a good return on investment and help remove certain export barriers such as tariffs and quotas. 

However there are some downsides such as lack of control over the business and the licensee may potentially become a competitor.

Joint Venture Strategy 

A joint venture is a partnership formed for a specific business purpose by two or more companies (from more than one country) sharing ownership, control and profit/loss. 

What do you need to consider? First you need to set your objectives and decide what you want to achieve from this joint venture. Then it’s time to do research. You need to find companies that are also interested in the same objective or goal that you are. Then it’s all about approaching them and presenting your company and objectives in the best way possible.

How does the Marketing mix work in new market entry?

Once you have decided upon your market entry strategy you need to think about the Marketing Mix (Product, Price, Place, Promotion, People, and Processes) and how you want to implement it. This is incredibly important when tackling a new market. Are you setting a low price to steal market share? Are you selling direct or via retailers or distributors? Are you sending people from home or recruiting local talent? These questions and many more need to be thought about to make the correct decisions.

Read about 3Sixty's New Market Entry Services