Single market entry strategies in all circumstances
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Marketing strategy is a process of focusing organisations goals to achieve. It can be combinations of product development, promotions, distribution, pricing, relationship management and all other elements that can play a vital role to achieve company target. The choice of target market segments, marketing mix, positioning and allocation of resources also determine the marketing strategy.
Now a day most concern for entrepreneur is about the generally to serve a various advertise It is highly concerned whether to provide a slight section of market or where is a hope for flourishing market share. Or allow the firm may get chance to succeed with targeting a lower market share among the customers whom it is targeting. Narrow market may allow building customer loyalty and lovers the threat of retaliation from generalist incumbent but requires a much higher market share within the firms' target market to succeed.
As Porter suggest three generic strategies which is available to firm are low cost, differentiation and focus. Porter's intention as focus was that the firm need to develop the ability to serve a particular target customer and potential customer group. Embedded in firm's choice to adopt a focus strategy is that it must address the focus in terms of any given its resources and opportunities as each firm's optimal choice of action depends on the actions taken by other firms.
The literature on the optimal degree of focus for new venture has reached very mixed conclusions but Porter's recommendation was for niche strategy as most appropriate. Again for new ventures should enter markets aggressively, facing larger incumbents head on. The latest studies develop named as contingency approach, but depends highly on industry condition.
There are many ways to enter in a market.
Entry Strategy Decision:
Market entry strategy gives the theory about decision just like a support tool which modify the decision making process with two way Aggressive non aggressive and Focussed entry broad front entry.
1. The Blitzkrieg entry
Extremely aggressive, broad-front approach that uses a large scope of geography and market sectors for every single force, as strategy requires rapid market infiltration; it probably would not be suitable where there is not a abundant market.
2. The cavalry charge
As this strategy is highly aggressive and firm as well all the fundamentals of aggression are still used, but in constrained and controlled utilization to particular market sector and geographies. To build a cavalry charge for a technical product, one appliance would be advertised in a concentrated way to ensure early achievement. The cavalry charge requires a generous market, but not so unfavourable that market sectors into which entry is delayed are not gone astray to competition according to 'small business can'.
3. The strike force (non aggressive focussed)
The non-aggressive and decisive application tactic can be a lowed key, considered entry into a carefully defined market. This strategy might be found to be more fitting to a market that is sparse and aggressive.
4. Guerilla tactics (non aggressive broad front)
The approach of guerrilla is an alternative non-aggressive and broad-front market application. It uses comparatively low supplies to be directed at the most capable positions in markets that are bountiful, but aggressive. It can furthermore be used to investigate markets to concentrate on latter without creating convincing competitive interest or counteraction
If all the industry in a same market can apply same strategy to enter a market or they can follow different market strategy. As a case study Microbrewery is taken to analyse.
There was a paper was empirical inquiry into the microbrewery segment of the U.S. brewing industry, designed to investigate the relative merits of specialist firms' different degrees of focus. The question addressed is whether focus affects specialist firms' short-run performance in an industry where there are entrenched generalists as well as many new, entrepreneurial specialist entrants.
The consequence was that the greater part of the variation in the implementation of microbreweries stems from variation in the administration, regulation, or market of single breweries not seized clearly by other variables included in the study. Effect of the research work are of noticeable significance to entrepreneurs in many industries, it is regularly thought to go into a stable industry in which recognized corporations are previously in place, operating a broad range of the market and conclusion showed that in such circumstances a carefully focused method to market is best.
As an example People Express Airlines at first flourished by focussing on the needs of budget-conscious leisure travellers and then collapsed, in part because it began to try to serve business travellers and other who are less price sensitive on certain routes.
So after analysis books and academic journals on the topic given, it can be concluded like this that there is no such strategy that can fit for all business or circumstances. It is found that to succeed in business world, businessmen introduce two or more strategy to cope or mix and match of different strategies as example is:
Market Entry Strategy for Large Firms.
A study of Japan, big clients contact with numerous Resellers, and employed a small sales and technical team to control the Resellers, execute demand creation, and present technical support. Demand creation is crucial for success. For example, in the world currently $100m revenues exceed by near about 165 Japanese integrators. Financial institution or large manufactures of subsidiaries are common. These corporations tend to be mechanical, and not invest in significant marketing. However, a small group selling in tandem with local partners can pull the technical resources and the consumer contacts of its large number of partners.
The Market Entry Strategy for Service Firms
There are many partnering scenarios in the service companies to fully localize and duplicate the service of western companies style. A partner are committed with infrastructure, staffing and recommended the funding of market development. A pure sales organization relationship will be fulfilled, if the service might be delivered remotely.
B) Franchising is a common methods of entering services markets abroad: special attraction of international franchising to both partners:
As Welch, chairman and CEO, General Electric - quoted in Fortune, "Globalization is now no longer an objective, but an imperative, as markets open and geographic barriers become increasingly blurred and even irrelevant. Corporate alliances, whether joint ventures or acquisitions, will increasingly be driven by competitive pressures and strategies rather than financial structuring"
Internal growth, external growth and disinvestment strategies might involve an international dimension with special complexities (Thompson, 2005). Variable growth rate, behaviours, tastes and preferences, and political stability differs from country to country and national policies can dictate the appropriate strategy. Firm enter into the international arena, for a variety of reasons. Motives are directly related to the mode of market entry adopted by a company. The traditional way in the literature is to regard export motives as push and pull factors. Selecting international markets in which to operate is very crucial element of international activity. There is direct market entry and indirect market entry strategy with and without foreign investment and according to Thompson (2005), 'Franchising' is an indirect strategy to enter a market without foreign investment.
In most developed economics franchising is widely used for operating business and it is a system which has enabled organisations to develop some large brands around. The government of some developed economic countries encourage actively using franchising as a way of fostering entrepreneurship.
According to Chan and Justis in Franchise Management in East Asia, (1990)it is a fastest growing method of doing business as it became a major catalyst for economic growth, employment and development in all over the world. Franchising has moved from traditional products to service industry.
Reasons behind the franchise:
Resource scarcity: company needs access to management talents or other knowledge not obtainable to them. On the other hand there might be a need for expansion but large amount of money to invest is not available at the same time.
Agency theory: is the way in which those people who manage the outlet are motivated and monitored, as franchisees have considered financially investment in stake and they receive from outlet, and also more motivated then managers of company-owned units to work hard to make the franchise profitable.
Risk Spreading: compensating for the decisions surrounding any expansion, is accomplished through franchising. The investment risk is lowered through franchising compared with joint ventures, which can involve large capital investments and legal complications. Franchising creates sates and brand recognition at a much lower cost. At international expansion the political risk and the overall risk of failure are primarily safe by franchising
The timescale required by franchising is seen faster than self-owned expansion, which will often require more monitoring. The process of establishing a chain of franchises increases the knowledge of the franchisor, and the time required for each new outlet is reduced as expertise increases. With experience the franchisor develops sensitivity to site selection, store layout, procurement and operating policies appropriate to particular environmental settings.
Training : to start the business smoothly the franchisee need to train up. By training he or she got better knowledge in business; how to serve better quality of product, how to control the business; and how to cover the product preparation; recruitment knowledge and also spread marketing. A good franchiser is said to provide continuous ongoing training to keep all their staff up to date.
Buying Supplies at Lower Costs: Since the company, negotiates prices with the suppliers on behalf of the franchise units, the franchisee can obtain all the supplies at much lower costs than usual. This is also because of the huge discounts obtained due to the size and regularity of the orders procured. Buying bulk instead of for individual franchises results in huge savings, giving franchises a big advantage over their competitor companies as they are able to reduce spending on a day to day basis. This acquirement is more advantageous to franchisee rather than acquiring supplies individually and separately.
Acquiring the status of the company: As the network expands for the company, its position in business becomes bigger. Mall owners prefer it if well branded companies are placed inside their malls as they want everything to be found inside their malls "one stop shop" where everything can be bought all from one place.
Continuous support from the franchiser: Although he is potentially running his own business, the franchisee can get the help of the parent company if and when he needs assistance. The wisdom and services of the head office are available as well for assistance. In addition, many companies have field operations personnel who are available to contact if there are any problems.
The franchisee and company discuss the company future plan, increase the consumer and also decorate the store to attract the consumer. Help is also offered in determining appropriate stock inventories, when opening the business. This kind of support is what sets franchising apart.
Benefits for the Franchisor: Franchising is a concept that benefits both the parties involved. For franchisor, rapid growth occurs, even with minimum capital expenditures. Expansion is the only way a business can recognize maximum profit.
Continuous Research and Development Programs: The Company itself invests in Research and Development into product innovation, leading to the development of more efficient technology, new products and improvements to existing products. The franchise can then take these on board to help them keep up with the constantly changing demands from consumers in the market.
Extensive Promotional Campaigns: A franchise benefits from lower costs of marketing in the form of advertising campaigns which promote all the franchises of the company, since the costs of such campaigns are spread out between all the franchises. As all the franchises jointly fund the advertising campaign, it enables the company to hire the best advertising agencies available.
Despite the many advantages of franchising, there are also many disadvantages. Higher legal expenses may occur due to preparing the documents necessary for the various countries, although once a basic form has been made; it can be used in many countries as a guide. All marketing for franchise must be approved by the agencies and cannot by any means contain any sort of earning rights. Larger quality control and similar controls often occur, compared to a business owned operation. A franchiser must be mentally as well as physically prepared to franchise and must be comfortable in working with his franchisee. A good relationship must be evident between franchisor and franchisee. There is also likely chance of the loss of freedom by the franchisor. Unmanaged growth due to the verified capability for rapid expansion, the downside is too rapid an expansion. Another issue franchisor may have is finding a suitable and competent franchisor, in order for the relationship to be long lasting. Ideally the franchisee will be willing to merge entrepreneurial energy and skills, with motivation to follow set systems and be a team player. For the franchisee there is also an ongoing cost, as a percentage of the revenue will have to be paid to the franchise, and there is not a great deal of independence that is allowed. Along with this, buying a franchise means that everything has to be done their way, as franchisees are not the ones in charge.
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