Beachhead market

From CEOpedia | Management online

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.

Beachhead markets are a type of market where a company will focus its resources on a specific area in order to gain a foothold in a larger market. Companies often use beachhead markets when they are launching a new product or service. This strategy allows them to focus their resources and attention on a specific area or set of customers in order to gain a better understanding of the market and build a presence in the larger market. Beachhead markets can be used to test new products, gain customer feedback, and develop relationships with customers.

The beachhead market strategy is often used when entering a new market or launching a new product. It involves the selection of a specific market that can act as the point of entry into a larger market. Companies will then focus their resources and attention on this small market in order to gain a better understanding of the larger market, build relationships with customers, and gain feedback on their product or service.

The goal of the beachhead market strategy is to establish a foothold in a larger market. By focusing on a small area, companies can gain a better understanding of the larger market and develop relationships with customers. Companies can then use the feedback they receive from their beachhead market to refine their product or service and gain a larger presence in the larger market.

Example of Beachhead market

A beachhead market could include a specific geographic region, demographic, or type of customer. For example, a company may decide to focus on a small city or town when launching a new product. This would allow them to better understand the market and customer needs in that area. Another example could be focusing on a specific demographic such as millennial males when launching a new product. This would allow the company to gain a better understanding of the needs of this demographic and how their product or service could be tailored to meet those needs.

Primary 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, p. 68).

When to use Beachhead market

Beachhead markets are an ideal strategy for companies entering a new market or launching a new product. This strategy allows companies to focus their resources and attention on a specific area or set of customers in order to gain a better understanding of the market and build a presence in the larger market. Companies can use the beachhead market strategy to test new products, gain customer feedback, and develop relationships with customers. Additionally, beachhead markets can be used to identify potential customers, understand customer needs, and test pricing strategies.

In summary, beachhead markets are an ideal strategy for companies entering a new market or launching a new product. This strategy allows companies to focus their resources and attention on a specific area or set of customers in order to gain a better understanding of the market and build a presence in the larger market. Companies can use the beachhead market strategy to test new products, gain customer feedback, and develop relationships with customers, as well as identify potential customers, understand customer needs, and test pricing strategies.

Types of Beachhead market

  • Geographic Beachhead Markets: A geographic beachhead market is a specific region or area that a company can focus its efforts on in order to gain a foothold in a larger market. Companies often use this type of market to target a specific demographic or group of customers.
  • Niche Markets: Niche markets are specialized markets that focus on a specific product or service. Companies often use niche markets to test new products or services before launching them into the larger market.
  • Industry-specific Beachhead Markets: Industry-specific beachhead markets are markets that focus on a specific industry. Companies often use this type of market to gain a better understanding of the industry and gain a foothold in the larger market.

Steps of Beachhead market

  • Selecting a market: The first step of the beachhead market strategy is to select a market that can act as the point of entry into a larger market. Companies need to consider factors such as the size of the market, the potential customer base, and the level of competition.
  • Focusing resources: Once a market has been selected, companies need to focus their resources and attention on this specific market. This may include increasing marketing efforts, implementing customer service initiatives, and developing relationships with customers.
  • Testing products: Companies can use their beachhead market to test their new products or services. This can help them gain feedback from customers and refine their product before launching it in a larger market.
  • Establishing relationships: Companies can use their beachhead market to establish relationships with customers. This can help them gain a better understanding of their market and build a larger presence in the larger market.

The conditions necessary for a beachhead market

The conditions defining a beachhead market (B. Aulet 2013, p. 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.

Advantages of Beachhead market

  • Cost-Effective: One of the main advantages of beachhead markets is that they are cost-effective. By focusing on a small area, companies can limit their resources and attention to one area, which can help reduce costs.
  • Understanding of the Market: By focusing on a specific area, companies can gain a better understanding of the larger market. This can help them to refine their product or service and create a better strategy for entering the larger market.
  • Feedback: Beachhead markets can also provide valuable feedback on a company's product or service. This feedback can be used to refine the product or service and ensure that it is suitable for the larger market.

Beachhead markets offer several advantages, such as cost-effectiveness, a better understanding of the market, and valuable feedback on a company's product or service. By focusing their resources and attention on a small area, companies can gain a better understanding of the larger market and refine their product or service before entering the larger market.

Limitations of Beachhead market

Despite the potential benefits of beachhead market strategies, there are some drawbacks and limitations to consider.

  • Unclear market needs: While beachhead markets can offer valuable insights into customer needs and preferences, they may not accurately reflect the needs and preferences of the larger market.
  • Limited resources: Selecting a small market requires companies to focus their resources and attention on a small area. This can limit their ability to expand into other markets or to meet the needs of a larger market.
  • Limited customer base: Beachhead markets tend to have a limited customer base. Companies may not be able to meet the needs of a larger or more diverse customer base.

While beachhead markets can offer valuable insights into customer needs and preferences, they can also present some drawbacks and limitations. Companies may have difficulty accurately reflecting the needs and preferences of a larger market, may have limited resources, and may have difficulty meeting the needs of a larger or more diverse customer base.

Other approaches related to Beachhead market

  • Penetration pricing strategy: This strategy involves setting a lower than average price for a product in order to attract new customers and increase market share.
  • Distribution channel strategy: This strategy involves selecting the most effective distribution channels to reach target customers.
  • Advertising strategy: Companies can use advertising to create awareness and reach potential customers.
  • Relationship marketing strategy: This strategy involves building relationships with customers to ensure loyalty and increase sales.

In addition to the beachhead market strategy, companies can also use penetration pricing, distribution channel, advertising, and relationship marketing strategies to gain a foothold in a larger market and reach new customers. These strategies can be used in combination with the beachhead market strategy to ensure success in a larger market.


Beachhead market — recommended articles
Global marketing strategy — Concentrated marketing — Market development — Imitator strategy — Strategic position — Differentiated marketing strategy — Pricing strategy — Focus strategy — Market niche strategy

References

Author: Anna Gołdyn

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