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Unlocking Market Entry Strategy: How DNBC Empowers Business Expansion with Confidence

Business Finance

Unlocking Market Entry Strategy: How DNBC Empowers Business Expansion with Confidence


Apr 06, 2024

Table of Content

Business expansion opens the door to millions of new customers and dramatically boosts income. Breaking into a new market can be both exciting and daunting. A well-planned strategy is essential, whether expanding your business or introducing a new product.

In this article, we’ll learn about market entry strategy. Besides, let’s explore the advantages of expanding into those markets and understand how domestic and international markets differ.

Unlocking Market Entry Strategy: How DNBC Empowers Business Expansion with Confidence

What are market entry strategies

A market entry strategy is a plan to increase the visibility and distribution of a product or service in a new market. Market entry research assists businesses in expanding into new domestic or foreign markets where the competitive, legal, political, or cultural context may be less familiar.

A market entry study is the first step toward knowing a new marketplace. It assists brands in identifying various success elements, revealing potential difficulties, and discovering hidden potential opportunities.

Why do businesses enter a new market

First and foremost, why should you consider entering a new market? What are the benefits of doing something difficult and costly? Here are some of the major ones:

Why do businesses enter a new market
  • You’ll get more customers and earn more money. The most important reason to examine new markets is to expand your business and improve revenue by selling more products to more clients.
  • There may be no more prospects for growth in your home market. If your local market has reached its income limit, moving into new areas may be your only option for growth.
  • Diversifying your firm reduces risk. If one market falls for whatever reason, you’ll still have others to keep you going.

Domestic markets and international markets

Are you going to join a new domestic market or export your items to sell in another country? Let’s explore how they differ in detail below.

Domestic marketplaces

Typically, this will be considerably easier than joining an international market. The culture will be identical, everything will be geographically nearby, and everything will be similar to your current marketplace.

International markets

Global expansion is when things get complicated. You’ll need to consider numerous distinctions in managing your business. This includes:

  • Cultural differences
  • Administrative differences
  • Economic differences
  • Logistical obstacles in moving goods overseas

Things to consider

Before entering any new market, you should determine whether you can afford the move. Can you afford the exporting fees, working with intermediaries, taxes, and all other associated expenses? And how much of the market can you realistically hope to serve?

You must also assess whether the product or service will be effective in your target market. Market research (both online and offline) is critical in verifying that demand for your product is sufficient to cover the export costs.

Risks of entering new markets

There are various dangers associated with entering a new market, including:

  • Country risks include the chance of political turmoil, unexpected changes, or financial problems that could affect your business.
  • Foreign exchange, such as the likelihood of foreign exchange rate fluctuations, could majorly impact your bottom line.
  • Cultural risk refers to the likelihood that your new company venture will face obstacles due to significant cultural and customary differences.
  • Weather is unpredictable. Are you entering a market where natural disasters and weather conditions may damage your facilities and cost you money?

After thoroughly researching your new market and weighing the dangers, you may determine it’s worthwhile to enter. If so, you can use various tactics, each with advantages and disadvantages.

What are market entry methods

Market entry methods are strategies that businesses use to enter a new market. Some of the most common market entry methods are below.

What are market entry methods

Direct exporting

Direct exporting involves shipping your products straight to the new market. You will be responsible for all process aspects, including transportation, payments, and operations in the new market.

This strategy takes more resources and time than dealing with an intermediary. You’ll need to set up an exporting infrastructure, educate staff, and make and receive international payments, among other complex duties.

On the bright side, this technique maximizes your profits because you do not have to pay third parties. You will also have complete control over your sales and marketing procedures.

Indirect exporting

Working with an intermediary is necessary when exporting indirectly. It offers some advantages, including:

  • Significantly lower risk. An expert third party will manage the exportation process, reducing the risk of failure.
  • You may concentrate on your existing business and home markets without getting distracted by new ones.
  • Fewer resources are required on your part.

However, profit margins are smaller due to intermediate fees. You’ll be detached from your client base, missing out on critical insights and lessons. You will lose entire control of international sales and marketing.

There are various options for indirect exporting. Here are some of the more common examples.

Indirect exporting

Indirect exporting with purchasing agents

Buying agents are representatives of foreign corporations that wish to purchase your items. When selling your items to a new market, you must work via them.

They are typically compensated by commission and will attempt to negotiate the lowest feasible price. Sometimes, purchasing agents are government agencies.

Indirect exporting through distributors

You can sell your goods directly to distributors or wholesalers, who distribute them to retail stores.

Indirect exporting via management and trading companies

Export Management Companies (EMCs) exist to handle all of your export and sales operations in your new market.

Discovering the correct EMC is worth researching, as most specialize in a specific market or location. They’ll assist you in identifying markets, finding consumers, managing all shipping and logistics, and more.

Indirect exporting through piggybacking

Piggybacking occurs when you allow another non-competing company to sell your product. This might be especially effective if the partner company already has a client base and distribution infrastructure in your target area.

You will get quick access to your new market but for a cost.

Producing products for the target market

Another alternative is to manufacture your products in the target market. This saves you money on transportation and eliminates many of the logistical issues associated with exporting your product abroad.

Producing products for the target market

However, you must also consider the numerous problems of manufacturing your goods abroad, such as legal issues, expenses, potential hazards, etc. Depending on your position in the new market entry strategy, this could be a viable choice.

Franchising and Licensing

While franchising is frequently linked with fast food or quick-service restaurants, it can successfully promote expansion in various industries.

In franchising, a semi-independent business owner (the franchisee) pays fees and royalties to the franchisor in exchange for the right to use a company’s brand and sell its products or services.

Franchising and Licensing

While franchising and licensing are business agreements in which specific components of the firm are shared for a charge, a licensing arrangement is usually more limited.

Entering a new market may be incredibly beneficial, allowing your company to advance and attain new levels of success. It is critical to investigate all choices and verify that your export approach is the safest and most effective for you. You’ll also need to extensively study the market to grasp its potential and position your product for success.

How DNBC empowers business expansion with confidence

When making a market entry strategy, businesses must seamlessly plan about moving money across borders. DNBC Financial Group’s international money transfer services make this possible. They offer reliable solutions, empowering businesses to execute their market entry strategy confidently.

Reliable payment processing

Our technology enables entrepreneurs to manage international money transfers comfortably, knowing their transactions are handled securely.

Free 1-on-1 support

Furthermore, our specialized staff offers individualized 1-on-1 help around the clock. Our professionals are ready 24/7 to help you with international transactions, payment processing, and financial plans.

Whether forming partnerships, investing abroad, or expanding operations, DNBC ensures smooth transactions, allowing companies to focus on growth and success in new markets.

Contact us for a free consultation and enjoy the benefits of DNBC’s secure payment processing and personal support!

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Note: The content in this article is for general informative purposes only. You should conduct your own research or ask for specialist advice before making any financial decisions. All information in this article is current as of the date of publication, and DNBC Financial Group reserves the right to modify, add, or remove any information. We don’t provide any express or implied representations, warranties, or guarantees regarding the accuracy, completeness, or currency of the content within this publication.