A market entry strategy is a key tool for clarifying what you aim to achieve and how you’re going to achieve it when entering a new market. While an export plan tends to focus on just a few products or services, your market entry strategy will provide you with a roadmap for your whole business.
A typical market entry strategy can take six to 18 months to implement. That timeline is well worth the effort as it will ensure you have the best distribution channels in place, that you are launching the right product and that your goals align with those of your stakeholders.
Here are five steps, recommended by Carl Gravel (Director International Expansion at BDC) you can follow to build a winning market entry strategy and start exporting into previously unknown territory.
1. Set clear goals
Be specific about what you want to achieve in your new market, including the level of sales you can expect to reach. Keep referring back to these goals as you flesh out your strategy to help you stay on track and confirm that your opportunity, products/services and overall business goals are aligned.
2. Research your market
Use every means at your disposal to get to know your new market—including going there in person. Gravel suggests attending trade shows as a participant or exhibitor to meet people, learn about the competition and make business contacts in the area. Market research is a specialism. Especially when it comes to selecting and entering new markets.
When getting to know your market, it’s important that you learn about it in every dimension—not just business
-wise but also socially, culturally and politically. If you’re entering a region with a different language or cultural norms than Canada, think about how you’ll communicate with key contacts.
Explore all the rules that could affect your product and how you produce and deliver it. You’ll also need to understand your labelling requirements to ensure your packaging complies with local regulations. Learn about different distribution channels, too. At this stage, says Gravel, it’s advisable to seek information and counsel from embassies, consulates and industry associations.
3. Study the competition
A detailed competitive analysis based on your research and visits to the target market will help you make key decisions—for example, if you need to modify your product or service to customize it for that market. Competitor analysis also is a specialism not every organisation posesses in house.
4. Choose your mode of entry
There are many ways to enter a new market. You can use the services of a distributor or agent located there. You might become a franchisee or acquire an existing business. You can even construct an entirely new brick-and-mortar facility.
Gravel says in his experience a lot of companies start by going into the U.S. first—and most choose to partner with an existing distributor. If you choose that path, make sure your strategy includes a unique value proposition for the distributor. Your partner will want to understand what’s in it for them, and how your product or service is different enough to stand out in the marketplace, but not so different that buyers won’t understand what it is.
5. Figure out your financing needs
Find out if you'll need to get any financing to support your export venture. You may also want to get insurance that protects your company against losses when a customer cannot pay. EDC offers credit insurance that can help you avoid cash flow issues when an international customer fails to pay.
6. Develop the strategy document
Once you’ve worked out the details of your strategy, you’ll be ready to write it out. Once created, this document will be your blueprint going forward, detailing your goals, research findings, contacts, budgets, major action items and timelines, and how you’ll monitor and evaluate your success on an ongoing basis.
“Be as structured as possible,” says Gravel. “Once you have a plan, it is easier to follow the action items and not be overwhelmed.”
He also advises having your accountant, lawyer and an external specialist review your strategy. You want to ensure you haven’t missed something that will prevent you from entering the market or require you to pull back after you get there.
Source: Business Development Bank of Canada
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