Companies attempt to enter new markets all the time, and yet for every successful entrant roughly four fail.1 Venturing into a new market is much like venturing into a new and unknown territory. It carries risk. The costs of miscalculation can be large. Because millions of dollars are at stake, failure is not an option.
For every successful entrant, roughly four fail.
Failure in most cases carries implications that extend far beyond the newly targeted market because the company reputation is at stake. Even sophisticated players like Fortune 100 companies experience market entry failures.
EXHIBIT 1. FAMOUS MARKET ENTRY FAILURES
We list common mistakes that firms make in preparing and executing entry in a new market. This information represents a valuable checklist for managers, who will be able to zero in on important action items.
EXHIBIT 2. THE TEN COMMON MISTAKES IN PLANNING MARKET ENTRY
EXHIBIT 3. THE TEN COMMON MISTAKES IN EXECUTING MARKET ENTRY
Because millions of dollars are at stake, failure is not an option.
Fortunately, practical steps can help management improve the odds of success. Proactive managers prepare a comprehensive plan that draws on significant market intelligence and hard evidence of customer need and competitive dynamics. The quality and timing of the program affect the ultimate success of market entry.
Once on the ground, executing new-market entry is an extensive process that encompasses many critical steps in the new market. The management team must have the right skills, knowledge, and experience to carry out these operations, as any misstep in the process can fail the project.
Because millions of dollars are at stake and failure is not an option, it pays to develop an objective outside view. To learn more about how we help our clients with market entry and global growth strategy, contact us directly.
1. “Evaluating Adjacency Moves: Balancing Desire with Data,” by Chris Zook, 2004, Harvard Business School Press, 1 Boston, MA