In the final installment of this article, Julia Cupman concludes her list of points to consider when assessing new market opportunities, and reiterates that the economic downturn still presents myriad opportunities to many companies:
- What is the market structure? A key to a market entry strategy is getting the channel to market right. To do this, the research should explain what the market looks like, who the main players are and what channels to market they are using. For example, substantial sales may be generated through distributors, agents or other types of intermediaries; this is important information that will suggest possible routes to market.
- What are the market’s perceptions of the current suppliers? A company cannot enter a market without understanding who their potential competitors are and the market’s views on these. Hence, the research findings should document which suppliers of the product/service are known and used, the perceived strengths and weaknesses of these suppliers, and the nature of the relationship between the buyers and suppliers.
- What is the competitive environment? The degree of rivalry should be explored to provide an insight into the competitive environment. Profiles of the major players should be included in the research, plus insights on how these players operate, how they position and promote themselves, and what their product/service looks like.
- What are the incentives and barriers to entry? The research should investigate how the incentives to entry can be maximized and how the barriers to entry can be overcome.
- What is the market size? No company should ever consider entering a market without a feel for market size. It needs to know the current size of the market and the annual market growth rate in order to determine whether market expansion is feasible.
- What is the opportunity for a new entrant? The research should explain how a new entrant should enter the market and how it could steal market share, including an indication of potential market size. It should also provide an overview of which market segments offer the most opportunities and what gaps there are in the market.
Market expansion may be a viable opportunity that offers a means for companies to sell more if their prospects domestically have been blackened by the economic downturn. Market entry research can cost anything from $40,000 upwards, depending on the nature of the research. This is a small cost to pay given the high return on investment. Hence, companies that cut their marketing budgets during economically challenging times are potentially closing doors to new opportunities.
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