Entering the market
|Entering the market|
Entering the market is the process of introducing a new product, service or business offering into the marketplace. It is a critical step in the product life cycle, as it is the point at which a company begins to generate revenue. It requires a comprehensive marketing strategy that encompasses market research, competitive analysis, pricing strategy, product positioning, distribution strategy, branding, and promotion. The success of entering the market depends on the company's ability to deliver a compelling value proposition to its target customers, successfully launch the offering, and then maintain and grow the customer base over time.
Example of entering the market
- Apple Inc.’s entrance into the mobile phone market in 2007 is an example of entering the market. Apple was a successful computer and music player company, but had never ventured into the mobile phone market. However, the company saw a great opportunity in the market and decided to launch the iPhone. Apple conducted extensive market research, designed a groundbreaking product, and created a comprehensive marketing campaign to introduce the phone to the world. The iPhone was an instant success, and Apple has since become one of the leading mobile phone manufacturers in the world.
- Nike’s entrance into the e-commerce market in 1999 is another example of entering the market. The company had been selling its shoes through brick-and-mortar stores for years, but realized that it could reach a wider audience and increase sales by launching an online store. Nike developed a comprehensive marketing strategy to launch the store, including a website redesign, search engine optimization, and targeted online advertising. The company’s online store was a success, and Nike now sells its products online worldwide.
- Amazon’s entrance into the cloud computing market in 2006 is yet another example of entering the market. The company had been selling books and other products online for years, but it realized that it could leverage its existing technology to provide cloud computing services. Amazon created an extensive marketing strategy to launch the service, including a website redesign, targeted marketing campaigns, and a pricing plan that was competitive in the market. The Amazon Web Services (AWS) platform was a success, and Amazon now offers a wide range of cloud computing services.
Formula of entering the market
The formula for entering the market is often referred to as the Marketing Mix, which consists of four primary components: Product, Price, Place, and Promotion.
- Product: This refers to the offering itself, which includes product features, packaging, quality, brand name and warranty. This is often referred to as product strategy.
- Price: This refers to the pricing strategy for the offering and how it is positioned in the marketplace. It includes the pricing of the product, discounts, payment terms, and pricing models.
- Place: This refers to the distribution channel and how the product is made available to customers. It includes the choice of distribution channel, stocking levels, and availability in the market.
- Promotion: This refers to the marketing and communication strategy used to reach customers and create awareness of the offering. It includes advertising, public relations, sales promotions, and other marketing activities.
Using these four components, companies can develop a comprehensive strategy for entering the market that takes into account their target customers, the competitive environment, and their own resources and capabilities. By combining the four components into a cohesive strategy, companies can create a successful entry into the market and increase their chances of success.
Types of entering the market
A successful entry into the market requires a comprehensive plan, and there are various types of strategies that can be used to do so. These include:
- Product Launch: This involves introducing a new product or service to the market. It requires careful planning, such as creating a positioning statement, designing a pricing strategy, and developing a promotional strategy to reach the target audience.
- Market Penetration: This involves increasing the sales of existing products or services within an existing market. It may involve adopting a more aggressive pricing strategy, introducing new products or services, and creating new distribution channels.
- Market Development: This involves expanding into new markets, either domestic or international. It may involve researching potential new markets, creating marketing plans tailored to these markets, and undertaking promotional activities to reach potential customers.
- Diversification: This involves introducing new products or services to new markets. It requires a thorough understanding of the new market and the potential customer base, as well as the ability to create a comprehensive marketing plan tailored to this new market.
Steps of entering the market
Entering the market is a complex process that requires comprehensive planning and execution. The following steps should be taken to ensure the success of entering the market:
- Develop a comprehensive market research and competitive analysis to understand the target audience, current trends, and competitors.
- Define a pricing strategy that is competitive and attractive to the target market.
- Identify the best channels of distribution to reach the target consumers.
- Develop a strong brand identity and messaging to communicate the value of the offering.
- Develop a promotional plan to support the launch and reach the target market.
- Monitor the performance of the offering and adjust the plan as needed.
Advantages of entering the market
Entering the market can be a daunting task for new businesses, but it also carries many potential benefits. The following are some of the advantages of entering the market:
- Increased brand awareness and recognition: A successful product launch can increase the brand recognition and awareness of the company, making it easier for potential customers to find and purchase the company's product or service.
- New customer acquisition: By entering the market, companies can increase sales and acquire new customers.
- Expansion of customer base: By entering the market, companies can expand their customer base to include new demographics.
- Differentiation from competitors: A successful product launch can help differentiate a company from its competitors, allowing it to stand out and capture more market share.
- Revenue growth: A successful product launch can lead to increased revenue, as companies can capitalize on their new customers and grow their existing customer base.
Limitations of entering the market
Entering the market can be a difficult and costly process, and there are a number of potential limitations that companies should consider before taking the plunge. These include:
- Limited resources - Companies may not have the necessary resources to enter the market, such as capital, personnel, or the skills needed to launch a successful product or service.
- Market saturation - When the market is saturated, it can be difficult for a new business to compete with existing providers.
- Regulatory issues - Companies may face a variety of regulatory obstacles when entering the market, such as product safety and environmental regulations.
- Lack of brand awareness - Companies may have difficulty gaining consumer awareness and loyalty if they lack an established brand or reputation.
- Technology challenges - Companies must be able to keep up with the latest technologies and trends in order to remain competitive.
- High cost of entry - Companies may need to invest heavily in research and development, marketing, and other areas in order to successfully enter the market.
In order to successfully enter the market, there are several other approaches that must be taken into consideration, including:
- Market segmentation: Identifying and separating the target market into distinct groups of customers who share similar characteristics and needs.
- Product development: Developing a product that meets customer needs and stands out from the competition.
- Pricing strategy: Setting a price for the product or service that is competitive, profitable, and attractive to customers.
- Distribution strategy: Establishing the channels of distribution that will enable the offering to reach the target customers.
- Promotion strategy: Crafting a promotional plan to create awareness and generate interest in the offering.
- Customer service strategy: Creating a customer service program that meets customer needs and builds loyalty.
- Kopalle, P. K., & Lehmann, D. R. (2006). Setting quality expectations when entering a market: What should the promise be?. Marketing Science, 25(1), 8-24.
- Belu, M., & Caragin, A. R. (2008). Strategies of entering new markets. The Romanian Economic Journal, 27(1), 83-98.
- Magnusson, P., Haas, S. M., & Zhao, H. (2008). A branding strategy for emerging market firms entering developed markets. Journal of International Consumer Marketing, 20(3-4), 95-107.