Key Methods of Market Entry Strategy | Adloonix (2024)

According to Adloonix, the formation of marketing strategies is one of the most significant and complex stages of the marketing process. A marketing strategy is the basis of an enterprise’s actions in market conditions, which determines how marketing can be used to expand target markets and achieve effective results. Due to the fact that the market is constantly developing, the market entry strategy must be flexible. It must be periodically adjusted. It is impossible to define a universal strategy that would be acceptable to all businesses and types of products.

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Before entering the foreign markets, the company must answer the question "what is the purpose?". For example, to expand its geographical presence to increase the value of a company, to secure foreign exchange earnings to attract a foreign currency loan or to purchase resources for foreign currency, to diversify the market, etc. Depending on the goals, the method of market entry strategy also differs.

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The easiest way to enter the foreign market is to export. The advantage of this approach is that it involves minimal capital investment in a foreign market. A company can export its products in two ways: use the services of independent international marketing intermediaries (indirect export) or conduct export operations independently (direct export). The indirect export practice is most common among firms just starting their export business. Firstly, it requires less investment.

The company does not have to acquire its trading apparatus abroad or establish a network of contacts. Secondly, it is associated with less risk. International marketing intermediaries are domestic exporting merchants, domestic export agents or cooperative organizations that bring their specific professional knowledge, skills, and services to this activity, and therefore the seller, as a rule, makes fewer mistakes.

Choosing countries for export, it is better to choose those with the simplest conditions for entry and the greatest possible sales potential. The wrong choice can be fatal for a small company. For this, it is very important to determine the criteria for selecting countries and to collect primary data for analysis. As in any sales, it is important to focus on the customer and answer the following questions: Who is your target audience? Where it is? Where are there fewer competitors? Where are the most convenient and affordable sales channels?

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It is also crucial to evaluate internal constraints, which may also influence the choice. If the product or service involves a lot of communication with customers, the important criterion may be the language of communication and documentation.

There are many benefits of exporting, such as:
a)Lower production costs
b)Few resources (at the initial stage of export activity, intermediaries are involved, so that there are no necessary human and financial resources to promote their products)
c)Enterprises are subject to minor dangers and risks, have access to the foreign market
d)It does not require large organizational efforts (warehouses, human resources)
e)Exemption from the workflow routine
f)The intermediary can deliver valuable analytical information

The disadvantages are the following:
a)High margin fees
b)Relatively high prices for the final customer
c)Limited control over territorial coverage
d)In the long run, indirect exports lead to diminishing returns

Licensing is a type of market entry whereby a company in one country transfers the right of a company in another country to use its unique production processes, patents, trademarks, technological achievements, and other valuable skills for a fee that is established under the contract.

Licensing allows the company to establish stringent conditions for compliance with the processes and marketing policies of the company; it is a convenient way to organize local production in the target foreign market without high investment. The most important advantage of organizing such activities is the low cost of organizing, maintaining and monitoring such activities.

The main problems that licensing involves are loss of uniqueness and complexity of control. The transfer of unique knowledge after the expiration of the contract turns the partner into a competitor who knows all the strengths of the company, has gained valuable experience in the industry and can use it correctly. And establishing control over compliance with the established rules of work by the partner – the licensee – is the most difficult in the licensing strategy.

The major advantages of the licensing for entering new markets include:
a)Get additional revenues for know-how
b)Cover foreign markets that cannot be covered by exporting due to some reasons
c)Expand business activity in the short term, not risky manner and without considerable capital investment
d)Create the basis for potential investments in the market
e)Save defined markets restricted by trade limits
f)Get a low political risk since the licensee is usually 100% locally owned
g)The licensing is extremely appealing for novices in international business

In contrast, international licensing has several disadvantages:
a)Lower profits than in other entry strategies
b)Zero control of the licensee manufacturing and marketing actions that lead to lower quality
c)Risk of loss of the trademark and reputation due to the partner’s incompetence

Franchising is a type of licensing of activities in which a franchisor company transfers to its intermediary (franchisee company) a license to carry out activities under its brand. You can transfer as simply the possibility of using the trademark and products of the company, as well as the whole business process.

In fact, a franchise agreement differs from licensing by more stringent requirements for an intermediary and a narrow scope. A franchising agreement is created in order to make another branch of your intermediary, to integrate it into your business processes, imposing its own rules of work on it. The licensing agreement has more freedom to use the intangible property of the company. The franchisee is more dependent on the success of the franchisor (parent company). The licensee may use the license in completely different markets, thereby reducing his dependence on the success of the parent company.

As a franchisor or licensor, your business effectively gives the licensee of franchisee permission to:
a)Produce a patented product or patented production process
b)Use your know-how
c)Receive your technical and marketing advice and know-how
d)Use your trademark, brand etc.

The major benefits of the international franchising strategy include:
a)Low political risk
b)Low cost
c)Possibility to simultaneously expand in many world regions
d)A successful partnership serves as a basis for further capital investment

There are several disadvantages of franchising:
a)It is complicated to monitor franchisee’s activity
b)The possibility of legal controversy with partners
c)A challenge to preserve the image of the franchisor in a new market
d)Franchisees’ activity must be monitored and evaluated for simultaneous consultation and assistance

Online sales are a convenient format for market entry, as well as for successful interaction for both buyers and sellers. Firstly, it removes geographical barriers and saves time finding and paying for the right product. Secondly, it offers endless opportunities to serve a huge number of clients at the same time 24 hours a day. Of course, provided that it succeeds in attracting and persuading site visitors to become buyers using effective marketing tools.

There are several differing methods of online selling:
a)Create own website in the export destination country which contains an online store, known as Business-to-Consumer.
b)Sell your product to leading eCommerce sites, which will further handle the marketing, sales, and distribution to clients, known as Business-to-Business.
c)Set up an online store within a major eCommerce site, known as Business-to-Consumer.
d)Sell your product through a third-party store or online supermarket, known as Business-to-Business-to-Consumer.

The main elements of online selling (4P Theory):
1.Product is what you sell by means of the Internet. It competes not only with other sites but also with traditional stores.
2.Price – the price on the Internet is lower than in a regular store due to cost savings.
3.Promotion is a set of measures to promote a brand or product online. It includes a huge arsenal of tools (search engine promotion, contextual advertising, banner advertising, email marketing, affiliate marketing, viral marketing, hidden marketing, interactive advertising, blogging, etc.).

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4.Place is the point of interaction in the purchase decision (for example, site, landing, advertisem*nt, social networking group, etc.).

The promotion of products or services on the Internet should be built taking into account the general rules and patterns of online sales. Firstly, you need to identify your target audience and direct your ads to it. Secondly, for a successful transaction it is important to interest your potential buyers, start an interactive dialogue with them and engage them in a sales funnel. For the convenience of customers, it is advisable to use as many channels of interactive communication as possible. Staying in touch with the buyer is necessary at all stages of sales and the after-sales period.

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Thirdly, there is another important element of online sales. This is web analytics that provides information on the effectiveness of the taken actions. Analytics allows you to determine the performance of specific ads and the advertising campaign as a whole, i.e. to correlate the finances spent and the result obtained (customer growth, completed purchases).

Depending on the specifics of the business and marketing tasks, the most valuable information is conversion – the percentage of certain targeted actions (for example, calls to a specified number, clicks on an advertising banner, clicks on an online basket, etc.) to the total number of visitors to the resource. Seeing the dynamics exactly which steps lead to an increase in conversion, you can more effectively build a marketing strategy and attract more buyers at lower costs. In addition, having noticed that the previously well-proven advertising message has ceased to generate leads (i.e., lead to the actions expected from the audience), it can be quickly replaced or adjusted.

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Adloonix offers its services in market entry strategy development for startups. Our team creates strategies considering a variety of components and factors. We adopt and adapt your products or services to satisfy the marketing needs in the foreign markets. Generation of a market entry strategy encompasses a deep analysis of the industry, direct and indirect rivals and potential clientele. Adloonix provides research of the digital local markets and can diminish the risks & extend the opportunities. For the majority of businesses entering the foreign markets is inevitable since the international market offers more reasons and opportunities for growth and development.

Adloonix team takes care of details. Therefore, it leads to greater success in the global market. Our firm recommends the following market entry cycle:
a)Brief: Discussion of the current business situation.
b)Market research: Data collection and profound survey to understand industry, rivals, and perspectives

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c)Presentation: Market research submission, discussion of all questions, unique value recommendations for the further development of your startup
d)Digital CX strategy: Planning and structuring of all necessary digital actions that are to be taken in the future of marketing strategy development
e)Analytics: Adloonix provides analytics tracking for your business.
f)Traffic/Lead generation: Stimulation of target audience’s interest to boost sales
g)Implementation: Launching of a step-by-step plan

Before any product or service gains the trust at the foreign market, market entry research is conducted to give a complete and reliable business environment assessment. Studying the competitive environment and market factors are needed to enter the market with fewer risks and higher profits.

It is the first and most significant step to the successful launch of a product or service in the foreign market. It is chosen and developed for each market and each product for a certain period of time to ensure the most profitable commercial activity in accordance with the situation and availability. Thus, all this requires the creation of a successful market entry strategy. If you have some questions - don't hesitate to contact us.

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PS. Rely on data, not emotions and guesswork.

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Yours faithfully,
Vlad Sapozhnykov