Exploring 13 International Market Entry Approaches

Market entry strategies is an umbrella term for methods and techniques used by companies to market their products. Entering the global market is a new stage in a company’s development, but in order to ensure the entry is as successful as possible, a clear model of the process needs to be mapped out, a detailed plan also referred to as a road map. The road map for entry into the international market outlines key actions which have proven successful in practice, and how they can be adapted to meet the needs of a specific business. This article will consider the strengths and weaknesses of the most common strategies used by modern businesses to enter the international market and integrate their local and national products into global financial processes.

Understanding Market Entry Strategies

Market entry strategies is an umbrella term for methods and techniques companies use to achieve set goals. There are three key strategic areas with the following goals: 1) Innovation and achieving market leadership 2) A successor strategy, which aims to overtake the market leader with more affordable analogs of the original product 3) Taking over the market by reorienting consumers. Choosing the right strategy from the outset makes it easier to plan the budget, advertising campaigns, and decisions about logistics.

The Significance of Market Entry Strategies

A robust plan is vital for a successful entry to the international market, as a clear understanding of the stages involved in marketing products and services is one of the most effective control mechanisms. Developing a detailed strategy provides an overview of each entry stage for products of a particular type, and also provides control over the course of events by allowing timely adjustments to be made. In order to develop a robust strategy, you need to provide clear answers to two fundamental questions: for what purpose does your company need to enter the international market, and what specific audience do you want to target?

The Reasons Behind Venturing into Foreign Markets

A company’s strategy to enter the international market is not a cheap process, and there are many stages, which is why you need to start by determining the key aims and targets the specific company will work towards achieving. Apart from the obvious aims all businesses share of turning a profit and expanding their client base, entering the international market can also make it easier to carry out transactions with foreign partners, reduce risk, and can also offer tax exemptions and immigration opportunities. Determining the primary and secondary aims to achieve as a result of entering the international market is necessary to create an effective strategy.

Exploring the Targeted Markets for Expansion

The first step in creating a market entry strategy is choosing a market for the company to orientate itself towards when targeting the global audience. Companies where the concept of globalization is a cornerstone require the least consideration of what’s specific to the local market. Take the company Apple as an example, where a new product launch takes place at the same time all over the world. Other companies need to consider the local culture, this is most necessary when entering a market with an entertainment product. Here’s what you need to do before creating an international strategy: Paint a portrait of the target audience with key features Determine the size of the market and its key regulatory factors, taking into account both the laws that govern a country, and its national traditions Determine the typical features of local competition Clarify the nuances of local logistics.

Expanding Abroad: 13 Market Entry Strategies for International Success

The main strategies for entering international markets:

1. Exporting

Export is the most obvious marketing model, which involves the direct selling of manufactured products to customers abroad. Direct export is one of the most cost-intensive strategies for entering the international market. Its advantages boil down to being able to control every stage of product marketing. This is also the cause of the drawbacks in this strategy: the need for specialists in foreign law, foreign offices, etc.

2. Piggybacking

Piggybacking is a form of indirect export, where a “rider” company can piggyback on a “carrier” company that already has an export channel in the international market, and the “rider” can enter into a contract to have their company’s products included in the “carrier” company’s overseas inventory. Established logistic and legal channels are used in this strategy, and the companies involved share the profit in accordance with the contract. One example of piggybacking would be an agreement between a company selling sewing machines with producers of fabric, needles, and motor oil: the export of the primary and secondary products is carried out through a common channel, while their retail networks in the domestic market differ.

3. Countertrade

Countertrade is what may more commonly be referred to as barter. This strategy involves the exchange of products between two companies. Applying this method of entry into the international market can be effective in cases where the state of one of the participating companies implements harsh import quotas.

4. Licensing

Licensing transfers the right to do business in a foreign country. The scale of licensing depends on the business type: licensing can be local, where it’s only applied in a specific region, or federal, i.e., geared towards doing business on a countrywide scale in the foreign state. In most cases, the licensing strategy is used by small- or medium-sized businesses. The licensing system also allows local analogs of well-known companies to be launched, i.e., it’s convenient for companies that have chosen the successor strategy based on their key aims.

5. Joint Ventures

In this strategy, companies form a strategic alliance to enter the international market together and pool resources. These types of alliances allow for the creation of a larger and more stable framework, which is of no small importance when entering the global market. A classic example of this strategy would be Japan’s Sony and Sweden’s Ericsson.

6. Company Ownership

The purchase of an existing company in the country of the market you wish to enter. This allows you to use the old brand’s reputation, which simplifies integration into the economic system. But this strategy is only convenient in cases where you’re orientated towards markets in a specific country and don’t intend on expanding into a number of foreign countries at the same time.

7. Franchising

Franchising is the most popular form of international expansion for recognizable brands. In this case, a semi-independent business owner (the franchisee) in a foreign country obtains a license to use a famous brand, and the brand-owner (franchiser) doesn’t need to be directly involved in running a particular branch.

8. Outsourcing

Outsourcing grants another company that specializes in a particular field the right to handle certain international business operations on your behalf. For example, logistics can be carried out on your behalf by a logistics company, and licensing can be carried out by a company that offers legal services, etc. This strategy reduces the level of control you have over the process to reach the international market, yet significantly reduces the overheads involved in setting up these types of departments. 

9. Greenfield Investments

This strategy involves creating a subsidiary company in the new country, and building the business from the ground up—the creation of production facilities to be more precise. One example would be building branded factories or shopping malls. This means building enterprises to manufacture products or render services, as well as creating new jobs, and sometimes even new consumer audiences. This type of entry to the international market requires a significant amount of investment, but as a rule, these forms of investment tend to be supported by various incentives in the target country.

10. Turnkey Projects

Turnkey Projects are another form of outsourcing, where companies that specialize in creating foreign businesses take care of all the preparations to set up a foreign office, drafting suitable contractors to tailor suitable administrative, warehouse, and transport solutions.

11. Foreign Direct Investment

Direct investment in a foreign market, i.e., taking controlling ownership or substantial ownership stake in a foreign company, and the subsequent establishment of trade links. In this case, cooperation with the foreign company involves the use of existing enterprises, and products it manufactures or services it renders are received more favorably by the local audience.

12. Wholly-Owned Subsidiary

The creation of a subsidiary company, but unlike the strategy of greenfield investment, it involves the use of existing facilities, e.g. the acquisition of a completed building, rather than building one from the ground up. Implementing this strategy to enter a new environment should entail rebranding the foreign enterprise. In most cases where this strategy is used, the authority of the parent company is leveraged when entering the new market. An example of this model of entry into a foreign market would be when European manufacturers relocate production to countries in Asia.

13. International Mergers and Acquisitions

Mergers and acquisitions are the most widely known strategies, but for our purposes, they’re used within the system of the global market. This mode of entering the international arena involves buying a competitor’s company and subsequently integrating it into your own production and management framework. This model of entry into the international market is most often used to present a similar product to one already available on the country’s domestic market.

From Theory to Practice: Market Entry Strategy Examples

Every company is unique and needs to have its own strategy created to enter the international market. The methodology that works for Apple won’t necessarily be good for General Motors, etc. Below are a few examples of successful entries of new products to the international market. As a global market giant, Apple combines common and specific strategic elements. In order to enter the global market, the company used a strategy that can be summed up as “feeling at home anywhere.” The launch of a new product takes place simultaneously across all countries—a guarantee of world-class quality which is one of the company’s stand-out marketing traits. At the same time, the company’s presence varies depending on the particular country, which may have a larger or smaller range of their accessories, goods, and services. Marketing specialists from the Russian fast-food chain Teremok studied the market before entering the international arena, and decided not to begin developing the chain in Germany as they’d originally planned, opting for the United States instead. At the same time, the market for fast food is inherently competitive, and the fast food itself is a far more American concept than it is European. Thanks to a robust marketing strategy that combined national flavor with American food preferences, the chain set up two successful restaurants in New York. Oxygen Fitness is a German company that manufactures gym equipment with official retailers in different countries around the world. When the company entered the global market with their products, they centered their business around the idea of marketing affordable gym equipment for non-professionals that can be installed in an urban apartment. Thanks to their research into the market, the company is able to mainly offer the types of gym equipment that are popular in a particular country.

Navigating Global Markets: A Strategy for Market Entry

Entry into the global market means that a company has a presence in different countries around the world at the same time. Ideally, the company’s specific brand should ensure the same level of service in every country across all continents. In order to enter the global market, you need to offer a new product that meets the highest standards. There are corporations that have managed to integrate their business idea into the locale-specific ideological system by presenting themselves to the consumer as more than a brand, as something that represents a particular lifestyle or status symbol. Prime examples of such companies are McDonald’s, Apple, and Chanel.

Framework for Successful Market Entry Strategy

A marketing strategy is a system of steps that should be implemented to succeed in reaching a new market. In order to create an effective strategy, you need to analyze the market to assess the competition, regulatory legal framework, consumer interest, and also estimate the resources necessary to succeed in reaching the new market. Every foreign market has its unique nuances, which are worth taking into consideration for a productive market entry.

Key Considerations in Market Entry Strategy

The strategy for entering a foreign market requires a clear understanding of the market’s social and geographical identity: the region and target audience. These local-specific nuances should be taken into account when developing the system of necessary tools to ensure the company’s entry into the international market is a success. There should be a demand for the new product, and the target audience should be able to relate to it. It needs to be attractive to create consumers, while organizational costs should be kept to a minimum in order to ensure a successful entry.

Adapting to Global Terrain: Challenges in Market Entry

The difficulty involved in entering the transnational market arises from discrepancies between different legal systems, local business traditions, etc. Expanding a business beyond domestic borders allows you to reach new markets, but entering each new competitive market requires its own individual approach to create a suitable strategy, unless we’re talking about global giants like Microsoft or Apple, as these brands have been marketed on the overseas with globalization as a cornerstone from their very inception.

“Breaking Cultural Barriers: The Power of Localized Content”

Localizing content to bridge the culture gap is one of the ways to integrate transnational companies into local markets. Translation and localization in particular, i.e., creating a marketing strategy that takes existing cultural specifics into account, will increase the level of trust a local population has in an international brand. Even emblematic global giants such as McDonald’s turn to the method of localization. Entering a new market is a complex framework of events that enable a product to reach a specific locale.