Entering a new market is a risky move, but sometimes necessary in order to grow and expand. There are many people, like you, that want to start a new business. Starting a new business means to enter a new market.
A new market is there where isn’t existing demand, but it could be.
Here are types of market segmentation that you should take into consideration before entering a new market:
- Geographic segmentation;
- Demographic segmentation;
- Behavioral segmentation;
- Psychographic segmentation;
- Occasional segmentation;
- Segmentation by benefit;
- Cultural segmentation;
- Multi-variable account segmentation.
In this article you will find out why to enter a new market, how to enter a new market and when to do it. There are a number of steps that will help you to understand better how to do it.
If you want to succeed in a new market, you must have an enter market strategy. An enter market strategy is a set of rules that will assure you a good entering process.
Your product or service will influence your strategy. If you follow the rules, your product or service will be that one that clients and prospects will want.
What you should know before getting started
It’s important to you to know how to enter a new market and when to enter a new market.
How to enter a new market will show you the best moves you can make and the best plan you can adopt to have a strong and certain entrance.
When to enter a new market tells you about the timeframe you must take into consideration to expand your business, what you should look for when you will do it and how you should work to make your product to be desired and demanded by your customers and clients.
More important than your entering market plan and your timing is why you should do it. You will tell now that the answer it is obvious – money, but there are many people out there that want to start a new business and they don’t really know why. And “money” is not the only one reason you should think about.
In some cases, they have some ideas about the reasons why they should enter a new market with a new product, but they don’t know exactly what would be the benefits of this.
Let me give you three reasons why you should enter a new market:
- More Consumers – the best reason of entering a new market is the fact that you can have a whole set of new customers. Not only there are more people who could potentially buy the offering but it is also possible diversify your market.This may be focusing on a more exclusive target market. A larger consumer market ultimately means a larger profit margin available which is great news to any business owner.
- Learn More – a new market is like a new object in school, but this time you can improve your business knowledge. Learning about the new market and how it’s different to the home market, what works well and adapt it to how it is sold everywhere.Different technology and techniques are present in different markets and entering them can contribute to learning more about them.
- More Variety – a new market is like a land of possibilities and choices. Entering new markets can create great value to a business; however it is essential that you do your homework!
Learning about your market including corporate culture, employee and customer expectation is vital, without this the risk of failure is extremely high.
How to enter a new market
We talked about why you should enter a new market. We established three important and strong reasons for doing this, so now we should talk about how to enter a new market.
We will talk about methods and rules that can help you enter a new market and have a successful business in a new field. There are eight steps you should follow.
The most important thing when you want to enter a new market is to know your customers. You have to know who you will be selling to. Targeting is the first step when you start a business.
You have to keep in mind that a smaller market will make it easier to assess customer requirements and ensure that a larger chunk of a smaller market is obtained rather than a insignificant part of a large share.
You have to be organized when you start working on this commit step because you have to set yourself a timeframe in which you have to reach your target market. Therefore, you have to know your customers better, hence you have to create a strategy to set a target.
The first thing to do first is to determine the demographics and geographic location of the new target. Determine which of the following categories characterizes your expansion efforts to enter a new market:
The best way to create a target customer profile is to take into consideration the fact that there are two types of customers:
- The individual customer;
- Business customers.
The individual customer profile:
- Marital status;
- Parental status;
- Financial profile;
The business customer profile:
- Type of business;
- Time spent in the business;
- Number of employees;
- Annual revenue;
- Products or services;
- Organizational structure.
Besides, you have to keep in mind the fact that you will work depending the customer’s needs.
The individual customer needs:
- Individual Customer Habits;
- What is important to Him/Her;
- Other needs.
The business customer needs:
- Purchase Decision – Makers;
- Other needs.
Identify entry points for entering new markets
Once you make yourself clear about your target market, you should identify potential points of entry. To minimize initial investment and maximize future revenues, it becomes vital to study key possible entrance points.
Any entrance point chosen should be assessed to a set of criteria:
- Does it allow to an underserved market?
- Is there a strong need that can be fulfilled?
- Are the key decision makers among the target audience accessible?
- Do they have the funding needed to find the new solution attractive?
- Are there any existing competitors and is the new solution strong enough to counter their resources and knowledge of the market?
You have also to take into consideration the BANT approach before entering a new market. Further, I will explain you what exactly means BANT.
BANT is an acronym that stands for: Budget, Authority, Need and Timeframe.
Before entering a new market you must know your target, as I said. You must find out if there is available money for you and you. If there is not that amount of money that you want, you can’t enter the new market.
To find out if there is money, you can put a simple question: “If we provide solutions to your needs, will be there funding available to take the next step?”
You have to make yourself sure that the person you will sell to have the authority to approve the purchase.
Most of the time, that person you will sell have to get permission to approve the purchase or he or she will have to submit the purchase to the one with authority to approve it.
You must dig and find out if there exists need on the market. Your product or service have to be useful.
Look closer and understand why your customers have that need and how deep the need goes.
This is a vital information because the market you want to enter may not be available for a long period of time and the one who want to buy may just gathering information.
Define Market Entry Strategy
To define a market entry strategy you have to complete three important steps:
- Price your product – it needs to strike a balance between affordability for the target audience and feasibility for the business;
- Take into consideration existing pricing strategies AND how to place the new product within them;
- How do you want to be perceived by the customer.
After you set your target customer profile, identified the entry points and defined the market entry strategy you can take all of these and assemble them into a plan for your future business, a plan that will help you entering the new market.
Keep the following points in your mind:
- Details of all required marketing plans and campaigns as well as timelines for all these to be set into motion;
- Process also need to be defined and communicated for all activities such as what will be sales cycle followed and how will leads be pursued and closed.
Research means identifying a well-balanced cross section of the target audience and approaching them either in person or via an online survey – these can help provide some basics results than can do it data to make any changes before a full market entry is committed to.
You must not miss the research part of your entering new market process because this part it will give a clear image of your future work and it will tell you if it’s ok to enter that new marker or it’s not ok so you can change the direction.
Remember: if something doesn’t seem to be as you imagined and a new market in the area you chose it’s not a good idea, don’t think this a failure and it’s time to stop. You just have to find a new area to introduce your future and new business.
- Run a pilot project in the target market;
- The test needs to be carefully defined so as to ensure that it’s big enough to give an accurate depiction of a large scale roll out effort.
You should focus on market share because this means increasing both marketing and sales efforts simultaneously. It is obviously that as you sell more, the easier will be for your business.
You will have visibility of your brand and customers will be centered on your product offered by your business entered on that new market you want.
This not mean that after you entered the market and your product is demanded and desired by the customers you need to stop with your marketing strategy.
Exit strategy means that you have to be prepared for both success and failure. If failure seems to come up, you have to know when and where to stop.
You have to exit the market and create a sort of diversion just to keep your brand image high, even if you and your company know what is really going with the business.
When is the right time to enter a new market?
The obvious time to enter a new market is after you checked all the points above. In fact, if you know very well what is your business about and you see an opportunity for expansion, that is the right time to enter that new market you want.
There is not a fixed period of time to enter a new market with your business, you just have to know if that is the right time for you.
To know if it is the right time for you, you have to make a research on market and see if there is your shot to go.
What you must know if you are a late entrant
- If you are a late entrant on a new market, you should know that you may not be offering a product or service that has a superior level of customer service, but you could work do that on future;
- There may be a new technology that would change the cost equation, so that you could offer a similar or better service or product at a lower cost;
- You may have developed a new way to enter the new market and you may have an innovative distribution strategy;
- You may be simply pricing aggressively, then targeting selected elements by taking advantage of the one who’s on the market at that time tendency to average pricing across all segments.
As a final conclusion, let’s resume our article about why, how and when to enter a new market. I will put there the main points we talked about.
The reasons to enter a new market are:
- More consumers;
- Learn more;
- More variety.
How to enter a new market:
- Commit – know your target market/customer;
- Identify entry points;
- Define your market entry strategy;
- Assemble plan;
- Ramping up;
- Exit strategy.
When is the right time for entering new markets?
- When you feel prepared to do it;
- After you set a market entry strategy;
- When you see that is the right time to boost your business into the new market.
All of these being said, I wish you luck and cleverness. Remember that it’s not hard to turn your business idea into a real business and it’s not hard to spot the right time to enter your business on the market.
Following the article, taking notes, doing more research depending on your business core and theme, you will do it properly.