Do you know why market entries fail?

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

Source: Great Prairie Group

 

OBSERVATIONS

We list common errors 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 MOST COMMON ERRORS IN PLANNING MARKET ENTRY

  1. Wrong market
  2. Low competitive advantage
  3. Underestimating competitors
  4. Lack of a defined entry strategy
  5. Overly optimistic revenue projections
  6. No unique value proposition
  7. No follow-on growth plan
  8. Poor operations planning
  9. Poor logistics planning
  10. Flawed pricing policy

 

 

EXHIBIT 3. THE MOST COMMON ERRORS IN EXECUTING MARKET ENTRY

  1. Low control over entry operations
  2. Ethnocentric assumptions: failure to “localize”
  3. Committing insufficient resources
  4. Wrong location
  5. Inexperienced in-marketing team
  6. Fix inappropriate marketing mix
  7. Unreliable supply chain
  8. Lacking support of an integrated IT platform
  9. Managing from afar
  10. Low control, no surveillance

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.

 

The approach to market entry must be thorough and precise to be effective. 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 our service, visit Market Entry Strategy or contact us directly.

Contact Us

Citations

  • 1. “Evaluating Adjacency Moves: Balancing Desire with Data,” by Chris Zook, 2004, Harvard Business School Press, 1 Boston, MA

Further Reading

Articles
International Expansion: What Is Your Market Entry Strategy? Market entry through new business model design International Expansion through Strategic Alliances