Beachhead market is used for start-up companies or companies looking to extend and diversify its product range to get a foothold on new markets by using small steps. It is mostly used in international trade by companies which seeks new market opportunities in different countries. Beachhead market is used as a basis to invasion on whole market in new country or geographic area. Using this market entry strategy requires that customers in nearby market have similar market needs and buy similar products, competition is relatively small (as in situation when product uses new technology), and communication between beachhead market and nearby markets is very good to spread the news about new attractive products.
Meaning of the term
Meaning of this term was coined in military strategy, as a way to invade territory of enemy by concentrating on small area (beachhead) from which further attacks could be performed. The term of the beachhead market refers to the landing of the Allies in Normandy in 1944. Allied concentrated their forces on the Omaha beach, which was a beachhead for them, and from here they invaded Europe. Such a tactic allowed them to win World War II. This concept was presented for the first time in Geoffrey Moore’s book entitled "Crossing the Chasm" (G. Moore 2002, s. 68).
The conditions defining a beachhead market
The conditions defining a beachhead market (B. Aulet 2013, s. 103):
- a similar product are available and buying by customers
- there are similar sales cycles and the value of the product launched on the market will be similar to available product
- easy flow of information about new products between clients
It's not easy to come to the market by start-ups because of huge competition. For business start and development, it is crucial to choose a beachhead market and gain a dominant share in it. Beachhead market is a place where the company starts to operate by offering products or services for sale. This place is not very attractive for existing companies with an established position due to its shallowness, which is why they are looking for more effective sales channels. Start-ups wanting to appear on such a market must follow the principle of attractiveness of their offer for potential customers. The measure that favors it is to create the same offer as the competition but with a lower price or individualize own offer by showing unique features that the product or service of the competition does not have. However, lowering the price is not advisable as it may lead to a drop in profitability, so it is better to focus on finding a unique value for the client. Entering the beachhead market and the activities carried out on it are used to build the company's brand. Knowledge and skills that the company will acquire during the acquisition of beachhead market are to be the basis for expansion into other markets. Knowledge and skills that the company will acquire during the acquisition of beachhead market are to be the basis for expansion into other neighboring markets and then to gain the mainstream market and build a strong position of the company.
- Preble, J. F., & Hoffman, R. C. (2006). Strategies for business format franchisors to expand into global markets. Journal of Marketing Channels, 13(3), 29-50.
- Aulet, B., (2013).Disciplined Entrepreneurship: 24 Steps to a Successful Startup. John Wiley & Sons.
- Moore, G., (2002). Crossing the Chasm. HarperCollins Publishers.
Author: Anna Gołdyn