New Market Entry

Executives constantly look at new market entry opportunities as a way of generating rapid growth, diversifying their portfolios, and (occasionally) secretly satisfying their entrepreneurial spirit. New market entry strategies enable companies to improve their revenue base by entering into new geographies, to solidify relationships with existing customers by extending their product offerings, and to diversify their customer base by targeting different customer segments.

Measuring the risks and potential returns of these ventures can be a daunting task for valid reasons. There is no shortage of tales of flawed business cases and execution failures, but, by the same token, many organizations have enjoyed remarkable success by turning new market entry into the cornerstone of their growth strategies. To unlock the full potential of new market entry opportunities, executives must be aware of common pitfalls, which include:

Chasing transitory trends as opposed to pursuing lasting and sustainable market opportunities;
Building business cases based on overly optimistic assumptions;
Developing unrealistic views of the size of the opportunity, which clouds judgment and prevents a candid assessment of the capabilities required to enter a new market successfully;
Impetus to leverage internal capabilities to penetrate a new market without understanding whether demand exists to substantiate necessary investments (corporate narcissism);
Failure to recognize the possible negative impact of new market entry actions (e.g., diversion of support away from core businesses, cannibalization of existing product lines).

Bridge adopts a fact-based, market-driven approach to help companies manage the challenges and exploit the potential of new market entry. Over the years, we have helped clients across a broad range of industries to address multiple strategic market entry questions, including:

What is the true size of a specific market entry opportunity? How fast is the market growing? Where is it in its lifecycle? How intensive is competition? How profitable can this market be?
What are the key determining factors of successful market entry? What investments are required? What other barriers would we need to overcome? How attractive is this opportunity given our goals, capabilities, constraints and other available investment options?
Should we push to be first into a new market, or is there value in waiting to learn more about market potential, product acceptance and execution challenges? Am I at a disadvantage if I am a late mover? How long should I wait?
What mode of entry provides the best strategic fit (i.e., organic growth, acquisition, joint venture or other forms of partnership)? If an incumbent is established in the new market we are contemplating, should we consider a direct attack, or seek a smaller niche position?
How should we determine and connect the various elements of our market entry plan, such as brand architecture, marketing investment, pricing guidelines, sales force structure, distribution network, supply chain configuration, manufacturing strategy, supporting infrastructure etc?