Blog - Strategy

New Market Entry Requires Specific Capabilities to Succeed (Read which specifically here)

Posted by Tim Lewko on Jul 9, 2012 5:36:00 PM

New Market entry is a strategic choice that must be deliberately made. It is the most natural path for growth because it intuitively asks ‘if we are having success with our products where else can we sell them? This is the normal path for every startup or legacy strategy – find a need – serve it and build capabilities to support it. As companies grow over time there reaches a point for many where they have had success but run into growth barriers including:

  • High Market Share – they have a sufficient share and are succeeding in home markets – but its getting tougher to sustain growth e.g. think of Coca Cola and Pepsi in North America – with a population growth that is relatively flat – there is only so much room for more people to drink more colas. The chart below indicates the flatness of the market in North America – where new growth through existing products is like squeezing blood from a stone.


  • Mature Markets- the market is maturing i.e. reshaping market needs requiring a change in product or face obsolesce. Chart 1: Comparative Regional & U.S. Workforce Growth 2000 to 2020 clearly shows that the type of needs in the US are much different than Asia – as the workforce or consumer is in a different stage of the lifecycle.


  • Emerging Markets – global markets become more attractive because opportunity is driven through size, proximity, scale or changing trade barriers and dynamics. If you are a company serving North America or Western Europe this chart clearly underscores what you already know – to sustain growth you must be prepared to look outside your traditional region.


To overcome these barriers and find growth for your company this deliberate choice is to enter new markets or another way to say it is to move to a “Products Offered” growth strategy. In a recent client example our client wanted to find new growth and formalize their path for growth in Latin America – looking to bring their proven product and service platforms to both Columbia and Peru.



With this deliberate choice for growth based on sound analytics and matched to their strategic assumptions they now are preparing the required capabilities for this choice. This is where many companies “fall down” on their growth adventures – they believe they can take exactly the same products and processes and replicate them in new markets. The reality is –although the fundamental needs may be basically the same –the new market development requires clear investments in skills, people, capabilities and processes to accomplish strategic goals and targets.


The following four capabilities are essential for success when seeking to enter new segments (emerging markets).


1. Product development capability for the modification of current products – whether “language” instructions, imperial to metric size changes, certifications by country and region, or even simply what colors and names “work” for the market.


2. Market research capability for identifying segments with the same needs the company’s current products satisfy. – this business intelligence must be gathered and factored into the decision making process – it cannot be only a gut feel that says “ I believe there is a market there”.


3. Marketing capability for entering new markets with the company’s products. How the product is promoted to one country does not translate to another necessarily.


4. Sales capability for convincing new markets to accept their products. This many times requires new hires in the locations and a patience for realizing profits in the bank – as the norms for selling and getting paid ( or even getting your money out of the country are different).


As I noted at the start – the majority of global trends and opportunities that support the drive to enter emerging markets are sound – but your strategic decision making process must be deliberate and based on data as you invest in your future. There may be gold in the hills next door to you ….but you must be prepared for the climb.