market entry strategy case study

Market Entry Framework: How to Apply in Case Interviews

The market entry framework is a tool to assess whether a company should enter a particular market or introduce new products in existing markets by assessing growth opportunities, capabilities, and challenges. In case interviews , these frameworks are useful templates for market entry cases.

In this article, I will explain how you can apply market entry frameworks in market entry cases using a four-step guide and case examples. Let’s get started!

Table of Contents

Market entry cases in case interview

A market entry is a type of case interview that asks candidates to evaluate and decide whether a client company should enter a particular market. The market entry case is one of the most common types of cases in consulting interviews since, in practice, consultants frequently deal with this type of cases 

Among MBB (Big 3) firms , market entry cases are more common at BCG and Bain than McKinsey.

Our Case Interview End-to-End Secrets Program assembled everything you need to know about consulting case interviews and how to pass them, so that’s the best place to go if you have general questions.

Types of market entry cases

There are three commonly encountered market entry cases: New geographic market case, New product category case, and New customer segment case. 

However, you also need to be aware that there are countless types of market entry cases and you can face any type of case in your case interview. Each case you receive has certain differences and comes with a different breakdown and solution.

Type 1: New geographic market case

Geographic market entry cases ask candidates to assess whether the business should expand to a new geographical market , for example, if Amazon Go should enter the UK or if Mercy Meats should enter South America.

Type 2: New product category case

On the other hand, product expansion cases ask candidates to assess whether the business should launch new business lines into their existing market , for example, if Disney should launch their own streaming service, or if Walmart should start selling meal kits from its service partners.

Type 3: New customer segment case

Lastly, targeting different customer segment cases ask candidates to assess whether the company ought to consider offering a version of an existing product to a new customer segment , for example, if KFC should serve premium fried chicken for the wealthy or if Gucci should target working class people. 

Examples of market entry cases

A French soft drink company, Le Seine, is looking to diversify its holdings by investing in a new fast food chain in the US. You are hired to determine whether they should pursue this path and, if so, how they should go about execution (HBS Case Interview Guide).

The client is a grocery store chain considering whether they should enter the emerging Internet-based grocery shopping/delivery market in the Boston area. This regional chain is currently one of the leaders in northern New England's traditional grocery store market.

In their core market, two competitors have emerged in the Internet/at-home grocery shopping business and are rapidly gaining market share. Should the client enter the market?

Apple, a technology company renowned for its premium smartphones and computers, has predominantly focused on individual consumers and creative professionals. Apple is now contemplating the prospect of expanding its market by targeting the corporate sector. Should Apple venture into the corporate market? If so, how should they do it?

Case interview frameworks – Definition & characteristics

Understanding what a framework is, the characteristics of good frameworks, and how to apply them in case interviews is essential to sounding structured and methodical – two main consulting traits interviewers look for.

What is a case interview framework? 

The most important thing to remember when using frameworks to solve a problem is to be FLEXIBLE. Consulting problems are complex and usually, there are no clear-cut, ready-to-use frameworks to solve them. The interviewer looks for context-relevant frameworks, not complicated but inappropriate ones.

Hence, the more you master the “building-blocks” frameworks, the better you can draw specific frameworks suitable to each context. Learn more about frameworks here .

Characteristics of a good framework

When building a framework, you should keep these three priorities in mind:

A good framework is top-down: The problem must be broken down from the generic to the specific, with each hypothesis staying on one level of the issue tree .

A good framework is MECE: MECE is extremely important in problem-solving because it ensures complete coverage of the problem while preventing effort duplications.

A good framework is geared toward isolating the root cause: To isolate the root cause, your framework must strictly follow the problem-solving methodology .

The MConsultingPrep market entry framework

In a market entry case interview , you are expected to evaluate an expansion opportunity (entry into new markets, new segments or new product lines in existing markets), decide whether the client company should pursue it , and, if yes, suggest an entry strategy . The underlying principle of the market entry framework is based on this process.

A market entry framework answers three questions, in order: “Should I enter?”, “Can I enter?”, “How to enter?” .

These ordered questions make up the  three steps of a market entry framework: Assessment, Feasibility, and Implementation.

Step 1: Assessment – Should I enter?

The first step is to justify WHY the company should pursue a particular expansion opportunity. To answer “Should I enter?”, you have to make two assessments – market assessment and company assessment . 

Company assessment will reveal the company’s internal motivations to expand, whereas market assessment shows the external motivations driving expansion decisions.

Company assessment

The first step after receiving a case is to ask for more information about your client company. Use that data to understand if there are internal motivations driving expansion decisions.

For example, let’s say you asked about revenue and were informed of a declining trend. You know this is a market entry case, so you might hypothesize that the client company’s revenue is declining because their product is at the mature stage of the product life cycle.

If the hypothesis is confirmed, this implies an internal motivation for the company’s expansion to other markets to capture new market shares or introduce new products to capture more revenues from their early life cycles.

Market assessment

The next step is to inquire into the market of interest to pinpoint the external motivations that can justify the need to expand. What is attractive about this market? Is it the market size, or the potential market demand? 

If information about the market size is available in the case, this implies that you need to first estimate it .

Sometimes, markets are attractive because of their location advantage , which can save transport costs or enable the client company to obtain cheap inputs . 

The open trade environment of a market might also help firms jump trade barriers. Finally, political stability is also attractive for minimizing risks and conducting business sustainably in the long run.

Other information to ask for:

What is the current product portfolio? What is the life cycle of each product? How closely related are the current products?

Who are the customers? How are they segmented?

What are the company’s key strengths and weaknesses?

What are the current distribution channels?

Who are the key suppliers and partners?

Regardless, the most important information to ask for are:

What geographical area will I serve, and how much demand will there be in the market?

What is the market’s growth rate? What are the current trends in the industry?

At what stage of the life cycle is it? Emerging, Mature, Declining?

Who are the existing competitors in the market?

Are there substitute products or potential entrants?

Are there any location-specific advantages that can save transport/ input costs?

Are there any macroeconomic, social, or geopolitical factors to consider?

Is there a key technology involved? How fast are technologies changing in the industry?

After gathering information about the company and market opportunities, do your cost-benefit analysis. By then, you can decide if the company SHOULD enter a new market or not. 

If you decide that the company should not enter , you no longer need to answer the other two questions. If you decide that it should enter , move on with the next step. 

Part 2: Feasibility – Can I enter?

Remember, only move on with this step if you’ve decided that the estimated benefit of this market entry outweighs the estimated cost. 

At this point, you need to assess the FEASIBILITY of entering a new market – does the client company have the financial capacities and capabilities to adapt to and profit from the new market?

Financial feasibility

Figure out whether the client company’s financial situation can cover investment costs . To do this, you first need to estimate the amount of investment required.

You can follow these questions, in order:

What investments are required for this market entry? (R&D, warehouse rent, factory rent, marketing, distribution, etc)

What is the current financial situation of the company?

Can the company fund these investments itself or can it raise the required capital?

Capability feasibility

The company’s capabilities help it secure market share by differentiating it from other competitors in the market. 

Examples of capabilities are firm-specific competitive advantages such as patented technologies, efficient logistics & production capacities, local knowledge, a low-cost structure, etc.

Important information to ask for:

Does the company have efficient distribution channels/ logistics?

Does the company have efficient production capacities?

Does the company have a patented technology/design that makes room for no substitution of its products?

Can the company obtain the capabilities it currently lacks?

Step 3: Implementation – How to enter?

This step will be applied if it’s feasible for the client to enter this new market and you must next suggest an entry strategy or an implementation plan. This plan must be specific in terms of timeline, modes of expansion, and execution details.

However, there are some market entry scenarios where the project may just require the first two components, which entails responding to the customer's inquiry regarding whether or not they should enter the market they desire. 

Propose a timeframe

Propose a time frame for your expansion strategy. When is the right time for the client company to enter the market? Is there a first-mover advantage at present? 

Don’t forget to refer back to the above information about the company’s situation and market opportunities to support your decision.

Propose a method of expansion

Regarding modes of expansion, there are three common strategies:

Partnership: Partnership entry modes are those wherein two (bilateral partnership) or more (network partnership) firms co-join their finance, skills, information and/or other resources to minimize risks. These are joint ventures , licensing , or joint distribution networks .

Organic: Organic entry modes involve those that increase the company’s sales using only internal resources. In other words, they are trade-based entry modes, such as exporting.

Mergers and Acquisitions (M&A): M&A generally occurs when one company directly purchases another company. Together, they form a new legal entity under one mother corporation.

Again, evaluate the information about the company and carefully compare that with the risks of each entry mode to decide on a suitable one. For example, if the client company has a patented technology, choosing a partnership entry mode runs the risk of technological theft.

You should also consider the commitment factor – how much control does the company want over the new market, and how much investment is it willing to make? 

With a simple strategy like exporting, you can exit easily but have less control. Meanwhile, with a wholly-owned subsidiary, investment costs are high but you also have more control.

Finalize your execution plan

The final step is to specify your execution plan, containing the key objectives to be implemented. The plan will also need to specify what tasks to be completed, who is in charge of each task, and how they should be carried out. 

The final plan will be the final deliverable to the client. The client can then choose to implement it themselves or sign another implementation contract.

The market entry framework – Sample case

Now, let’s apply the framework to a sample case so you can see the flow.

Situation: 

Your client company is Mercy Meats, an international plant-based meat producer in the US. The main ingredients in their products are soy protein and heme – a genetically modified ingredient extracted from soy roots that makes their products look and taste identical to animal meat.

Mercy Meats is considering an expansion in South American countries, Brazil in particular, after major successes in the US, Hong Kong, and Canada. Our client would like your help in deciding whether or not to pursue this growth opportunity, and if so, what their entry strategy should be.

We’ll begin by assessing the company – Mercy Meats, and Brazil’s market, to make an entry decision.

Company Assessment

For company assessment, we want to find out if there are any internal motivations specific to Mercy Meats regarding this entry decision. We are told that the only motivation is to satisfy its stakeholders’ expectations, profitability-wise and mission-wise.

Profitability-wise, shareholders want to scale up production to capitalize on economies of scale, thereby maximizing profits.

Mission-wise, the CEO and investors want to reduce the environmental footprint of the factory farming industry, by competing with conventional meat producers and making more consumers cut back on animal meat consumption.

Market Assessment

For market assessment, we will look at external motivations that Mercy Meats seek to justify its entry decision – attractive characteristics of Brazil’s alternative protein market.

What is the market’s size, growth rate, trends, and industry life cycle?

First, we’ll want to know the life cycle of plant-based meat, its market size in Brazil, the market’s growth rate, and trends. The plant-based industry is in its growth stage, with an annual average compound growth rate of 8% globally and 20% in Brazil’s market.

Meanwhile, we’re told that Brazil’s plant protein market size is predicted to reach $30.2 billion by 2023. This is mainly attributable to a strong shift in attitude towards vegetarianism among young Brazilian consumers. With a strong growth rate driven by positive attitude shifts, this market is an attractive place to be.

Who are the customers? What are their needs and preferences?

We can broadly construct a portfolio of our customers: people who are health-conscious, high-income, concerned about animal welfare, would buy plant-based protein as a substitution for animal protein, and enjoy similar tastes of real meat.

The interviewer might also inform us that our customers could be swayed by lab-grown meat for its real taste and “real meat” brand, although this technology is yet to be marketable due to its high price and environmental concerns.

The competitors of Mercy Meats will consist of any businesses meeting the same customer demand mentioned above. We’re told that direct competitors in the market are local plant-based brands, however, the tough competition will be posed by conventional meat players (such as Marfrig or JBS), who are starting to develop their own plant-based products.

Here, we should talk about events that can broadly affect our entry strategy. For example, we might point out that complex bureaucracy and lack of transparency are the two biggest barriers to doing business in Brazil.

As a response, the interviewer might say that Brazilian governments are committed to reducing bureaucracy by simplifying their tax structure and investing in public services digitalization (such as digitized tax fillings). This is a positive improvement, making Brazil a more attractive place to do business. You can raise other concerning issues in a similar manner if needed.

To summarize, we have sufficient reasons to decide that Mercy Meats should enter Brazil . Brazil’s plant-based protein market is overall attractive, with a strong predicted growth rate and, as a leading soy producer, can create a cost-saving advantage for the company.

The biggest concern so far is competition from well-established meat players, and lab-grown meat competitors in the near future. 

Step 2: Feasibility – Can I enter?

Now that we’ve decided that entering Brazil is beneficial for Mercy Meats, we need to see whether the client company is equipped with what’s required to do so, capability-wise and finance-wise.

First, we need to understand whether Mercy Meats has the capabilities (competitive advantages), to sustainably compete in the new market. 

In the US, Canada, and Singapore, Mercy Meats have very efficient logistical channels, with low warehouse capacity, minimal shipping time, low inventory turnover rate, and a high number of orders relative to all of its major competitors. The company definitely has the required capability to replicate another efficient logistical channel in Brazil.

Can the company produce premium quality products at a lower cost than its competitors?

Mercy Meats products, Mercy Burger, Mercy Sausage, and Mercy Pork, are much more expensive compared to animal meat products in Brazil. For example, one Impossible Burger pack weighing 1.4kg is currently priced at around $30, nearly 4 times higher than the same amount of beef (around $8 per 1.4kg) in Brazil. 

However, Brazil is the leading exporter of soybean in quantity due to its low price and premium quality. Hence, if the company can take advantage of the low soybean input in Brazil and can scale up its production, a more reasonable product pricing can be achieved. 

Does the company have a patented technology/design that distinguishes it from other competitors?

Mercy Meats owns a patented technology over its heme ingredient, a soy root-extracted ingredient that makes its products taste and look almost identical to animal meat. In fact, Burger Queen, a major fast food chain, chose to partner with Mercy Meats in the US because its products taste much more like real meat than that of Beyond Meat, Mercy Meats’ biggest competitor in the plant-based industry. 

What is the current financial situation of the company? Can the company fund the investments itself or can it raise the required capital?

Next, we will look at how much investment is required and whether the company can financially cover it. The total investment cost is estimated at $80 million, while the expected return is over $180 million in 2 years. 

Finance-wise, the company is doing really well, with average yearly revenue of $151 million. Mercy Meats also attracted many investors in the past, with $1.4 billion in total funding, of which $200 million was acquired in 2020. These figures exhibit investor confidence in the company, which implies a high chance of getting more funding in the near future.

After analyzing the facts and evidence, we can conclude that Mercy Meats clearly has the finance and capability to enter Brazil . Hence, we proceed with the decision to advise the client to say “Yes” to the entry decision.

The final step is to formulate an entry strategy, which includes deciding the implementation timeline, choosing the methods of expansion, and drafting an execution plan. We will examine each aspect, in the above order.

When is the best time to enter Brazil’s market?

The best time to enter Brazil is right now. We’ve observed that our major competitors, such as Marfrig, have started developing their own lines of plant-based meat. These competitors have better local knowledge than our client company and an already widely-recognized brand name in Brazil. Mercy Meats needs to move fast if it wants to secure a fair share of the plant-based meat market. 

Which method of expansion is the most suitable?

To effectively gauge demand, Mercy Meats should consider expanding under trade-based modes, exporting in particular, and growing organically first. After that, it is recommended that Mercy Meats establish its own subsidiary, to have better control of two aspects: technology and market. 

First, partnership modes are risky due to the potential of technological theft, subsidiaries or M&A modes can eliminate this risk, although they require more investment. Second, establishing a production subsidiary will enable the company to exert more control over the target market, by quickly adjusting production to customers’ needs and reducing logistic costs to be more cost-competitive . 

What is the execution plan?

Finally, we need to develop an execution plan.

What: The breakdown of tasks in the overall implementation plan, for example, establishing partnerships for exporting, marketing the product, setting up the factory, etc.

Who: Who will be in charge of the aforementioned tasks? What are their deliverables?

How: What are the targets for each task, what are the expected quality standards that align with the key objectives?

Market entry case: examples & guidelines 

Case 1: medicare plus.

Our client, MediCare Plus, is considering opening a new medical clinic in the affluent Riverside neighborhood of Los Angeles. Riverside is known for its high-income residents, including individuals from various socio-economic segments. 

The client aims to diversify their healthcare services and tap into the lucrative Riverside market that aligns with their expertise. They seek your guidance on whether to proceed with this investment.

Should MediCare Plus open a new medical clinic in Riverside, Los Angeles?

Step 1: Assessment - Should I Enter?

Current Capability: Can MediCare Plus handle this expansion given its current resources and expertise?

Strategic Alignment: Does this expansion align with MediCare Plus' long-term goals?

Market Size: How big is the Riverside healthcare market?

Market Growth: Is the Riverside healthcare market expected to grow?

Competitors: Who are the competitors in Riverside's healthcare market?

Step 2: Feasibility - Can I Enter?

Financial Feasibility

Initial Investment: What's the cost to set up the new clinic?

Operating Costs: What are the ongoing expenses, including salaries, maintenance, and utilities?

Revenue Projection: How much revenue can we expect from different patient segments and specialties?

Capability Assessment

• Facilities: Can MediCare Plus handle clinic setup and management in Riverside?
• Financing: How can we finance this expansion?
• Doctor and Patient Attraction: Can we attract top doctors and patients to Riverside?

Step 3: Implementation - How I Enter?

Key Milestones: What are the critical milestones and deadlines for the expansion?

Responsibility: Who is responsible for each task?

Tasks: What specific activities are needed for a successful launch?

Methods: How will we execute each task effectively?

Approaches: What strategies and methods will we use for marketing, patient acquisition, and operations?

Case 2: TechGizmo Inc .

Our client, TechGizmo Inc., is a leading manufacturer of smartphones and consumer electronics. They have been experiencing steady growth, with revenues of $500 million last year and a healthy profit margin of 15%. However, they are concerned about the cyclical nature of the consumer electronics industry, which can lead to fluctuations in their business.

The CEO is considering entering the market for smart home devices. They want your opinion on whether this would be a good strategic move for TechGizmo Inc.?

Current Capability: Can TechGizmo handle this expansion with its existing resources and expertise?

Strategic Alignment: Does this expansion align with TechGizmo's long-term goals and expertise in consumer electronics?

Market Size: How big is the smart home devices market in Westwood?

Market Growth: Is the smart home devices market in Westwood expected to grow?

Competitors: Who are the competitors in Westwood's smart home devices market?

Initial Investment: What's the cost to develop and launch the new line of smart home devices?

Operating Costs: What are the ongoing expenses, including production, marketing, and distribution?

Revenue Projection: How much revenue can we expect from different customer segments and product lines?

Product Development: Can TechGizmo efficiently develop and manufacture smart home devices?

Financing: What are the financing options available for this expansion?

Customer and Retailer Attraction: Can TechGizmo attract both customers and retailers to sell their smart home devices in Westwood?

Step 3: Implementation

Key Milestones: What are the critical milestones and deadlines for launching the new line of smart home devices?

Responsibility: Who is responsible for each task, from product development to marketing?

Tasks: What specific activities are needed for a successful product launch?

Methods: How will we execute each task effectively, from marketing strategies to distribution?

Approaches: What marketing strategies and distribution methods will we use to promote and sell our smart home devices in Westwood?

What do you think about the market entry framework sample presented above? It’s super detailed, isn’t it? Even so, it’s just theory. 

The only way to master the market entry framework is to practice. You need to learn and understand the fundamentals of market entry cases.

And it would be best if you had any consulting experts review your performance. Reach out to our ex-consultants , who can give you concrete feedback on your answer to a specific market entry framework case. 

Meet your coach today to start sharpening your skills! They’ll help you determine your weak areas and suggest effective improvement methods. 

Scoring in the McKinsey PSG/Digital Assessment

The scoring mechanism in the McKinsey Digital Assessment

Related product

Case Interview End-to-End Secrets Program

Elevate your case interview skills with a well-rounded preparation package

A case interview is where candidates is asked to solve a business problem. They are used by consulting firms to evaluate problem-solving skill & soft skills

Case interview frameworks are methods for addressing and solving business cases.  A framework can be extensively customized or off-the-shelf for specific cases.

Market Entry Framework: How to Use It + Consulting Case Example

• Last Updated May, 2024

Rebecca Smith-Allen

Former McKinsey Engagement Manager

Company X wants to know if they can profitably introduce their widget to the Chinese market.

Company Y wants to leverage its knowledge of the North American fast-food market to introduce a new restaurant format. How should they do it and how long will it take to reach profitability?

Have you read case interview examples that sound like these?

Of course you have, because all successful businesses want to become more successful by expanding into new markets, so there are many case interview questions on this topic.

Because of this, it’s important that you have a thorough understanding of the market entry case framework.

We’ve got you covered!

In this article, we’ll:

• Discuss market entry case interview,
• Break down the framework into 4 easy steps,
• Provide an example of a market entry case,
• Provide tips on using the framework, and 
• Point to additional resources to help you with the market entry framework and cases.

Let’s get started!

What is a Market Entry Case Interview?

Our Ultimate Guide to Case Interview Prep goes through everything you need to know about consulting case interviews and how to pass them, so if you have general questions, that’s the best place to turn. But if you’re ready to move on to market entry cases, read on.  If you’re asked a market entry case question, there’s a lot of information you’ll need to cover. You’ll be better prepared if you practice this type of case. A market entry case starts with a company deciding to enter a new market.

• They could sell a new product into an existing market. Example: Netflix produces its own content to air over its existing streaming service.
• Or they could take an existing product to a new geography. Example: Starbucks enters the Chinese market.

Whether a company is contemplating entering a new geography or a new product-space, the decision is a big one. The CEO will face complicated questions like:

• Is the market profitable?
• Does the company have the skills needed to compete in the new market?
• Does it have the financial resources needed to successfully enter the market?
• Should the company create the capabilities to enter the new market in-house? Buy a company already competing in the market? Form a joint venture with another company?
• What regulatory hurdles might they face?

The high stakes and complexity of market entry decisions are the reason corporate executives facing these decisions often turn to consultants for help.

Nail the case & fit interview with strategies from former MBB Interviewers that have helped 89.6% of our clients pass the case interview.

Breaking Down The Market Entry Framework Into 4 Easy Steps

Step 1: assess the target market.

Assessing the market is step 1 because if the new market isn’t profitable (or won’t be profitable in the future), there’s no point in going further with this case.

Questions to ask during the assessment of the target market include:

• What is the size of the market in terms of revenue?
• What is the market’s growth rate?
• What is the profit margin on sales in the market?
• What share of the market would the client need to break even? Become profitable?

Step 2: Assess the Client’s Capabilities

Questions to ask during the assessment of the client’s capabilities include:

• Do they have the technical skills?
• Is their cost structure competitive?
• Do they have the necessary sales or distribution channels?
• Can they get whatever capabilities they currently lack?
• Are there barriers to entering the market?
• Do they understand the customer segments in the new market?
• Can they tailor the product or service to the requirements in the new market so they can compete effectively?
• What government regulations will be encountered?

Step 3: Analyze Client Resources Relative to the Investment Needs & Expected ROI

Questions to ask while analyzing the client’s resources relative to the cost of market entry and expected ROI:

• Research & development
• Manufacturing & warehouse capacity
• Marketing launch & sales/distribution
• How long will it take to pay back the company’s initial investment?
• Does the company have or can it raise the required capital?

Step 4: IF Conditions for Market Entry Are Good, Then Determine the Best Strategy to Use

You’ve decided the client in your case should enter the market. 

Again, the decision of whether to enter the new market is only part of the answer. The company must decide how to enter it.

 For a new product or service, they should ask whether they should:

• Create the capability to build the new product or provide the new service in-house?
• Partner with someone already in the market?
• Buy or license intellectual property?

  For geographic expansions they need to ask whether they should:

•         Export to the new market from their home country?
•         Build a greenfield presence in the new country?
•         Partner with a company that already has a presence in the target market?
•         License their brand to franchisees?

 Questions to ask when determining the best entry strategy:

• Are there barriers to entry in the market? Intellectual property? Regulatory approval?
• Can the company overcome these barriers on their own or will they need to partner to do so?
• How important is timing? Is there an advantage to early market entrants? How fast do they need to have a product in the market to win?
• Will partnering allow the company to enter significantly faster than building capacity in-house?

Example of The Market Entry Framework: KFC Enters China

Today, KFC has over 5,000 fast-food restaurants in China . It’s the most popular fast-food chain in the country. 

How did the company enter the market to achieve this success?

When KFC first entered the China market, the success of southern-style American fried chicken in the China market was no guarantee.

The restaurant needed to transfer its successful North-American business model to the new market. 

But it also needed to take into account different consumer tastes, find promotional advertising that would appeal to the Chinese consumer, deal with regulations that required that Western companies to partner with Chinese-owned companies in order to enter the market, and more.

Let’s look through the KFC China example using the market entry framework.

Yum! Brands first entered the China market in 1987. At that time, the China market was growing quickly. The country’s middle class was expanding and was receptive to western brands. The Chinese restaurant market was dominated by a large number of street vendors and small, family-owned, single-location restaurants. In comparison, growth in the North American market was slowing and there was a high level of competition from McDonald’s, Burger King, Wendy’s, Domino’s Pizza, and other restaurants. The Chinese market provided an opportunity to enter a market without well-entrenched national chains of fast-food restaurants and capitalize on the market’s growth.

KFC was positioned as the second-largest fast-food chain in the U.S. by number of stores .   It had a winning formula of providing high-quality food at a competitive price and marketing it well. But KFC knew nothing about the China market.  The company had to answer important questions like:

• How to tailor their menu to Chinese tastes?
• What segment of the market to target?
• Where to locate their restaurants?
• How to develop a supply chain in the country?

The challenge facing KFC can be seen by the fact that when they first entered the market, their popular slogan “finger lickin’ good” was mistranslated as “eat your fingers off.” Gaining insight into the Chinese consumer was a critical hurdle to success in this market.  At that time, western companies had little experience with dealing in the Chinese communist government. But because the government required western companies to enter the market through joint ventures with Chinese-owned companies, KFC knew they would find help with these decisions by finding the right partner.

KFC considered entering the China market to be an important strategic investment to maintain its revenue and store growth despite high levels of competition in the North American market.  Their success in North American meant they could allocate substantial funds to the market entry in China despite the fact that it would take years for their investment to pay off.

As mentioned above, KFC was required to partner with a Chinese-owned company. They found a partner that had strong connections with the Communist government to ensure that they would be able to overcome regulatory problems. Their partner also helped KFC to identify its target market as the middle-class consumer who was interested in western culture. Their sit-down restaurants had a reputation for cleanliness which helped to set KFC apart.  In the early days, KFC restaurants also leveraged the fact that they were a unique and exciting experience, a view into American culture.  KFC China’s menu includes many items an American customer would not be familiar with, such as lotus roots, congee, and soy sauce wings. The restaurant had a 40-page menu because of the Chinese consumer’s preference for variety. Their promotion was tailored to focus on elements that the local culture valued, such as respect, love, and support for the elderly. The chain’s success in China depends not only on the taste of its food and its advertising, but also on the speed and convenience of its service. These attributes were as important to winning in the China market as tasty chicken. Yum China has been so successful that it has been spun off from YUM! Brands as separately listed stock on the New York Stock Exchange.

Tips On Using The Market Entry Case Framework

1. look for market entry cases buried inside other types of case study interviews..

If a company is looking for growth, market entry is one way they might achieve it, so your revenue growth case could turn into a new product or new geographic market case.

2. Ask your interviewer questions and take good notes on their answers.

Market entry cases require a lot of data–market growth, cost of entry, client capabilities. You’re likely to miss important information if you try to solve the case just through brainstorming and your own knowledge of the industry. Don’t be afraid to ask questions.

3. Don’t only consider whether the target market is attractive .

Look at all 4 elements of the market entry framework. Entering an attractive market without the right capabilities will lead to substantial losses and a CEO being fired.

4. Identify alternative market entry strategies and evaluate one relative to another .

For example, compare the advantages of a greenfield operation (full control over the business model and quality) versus partnering with a company with a presence in the local market (knowledge of the local consumer, speed). The comparison of one entry strategy to another can make the best choice clear quickly.

Additional Resources to Help You With the Market Entry Framework and Cases

This McKinsey article: Beating the Odds in Market Entry is a great resource for those who want to dig deeper on this subject.

In this article, we’ve covered:

• What market entry case interview looks like,
• Breaking down the framework into 4 easy steps,
• A market entry case example, 
• Tips on using the framework, and 
• Additional resources to help you with the market entry framework and cases.

Still have questions?

If you have more questions about market entry, leave them in the comments below. One of My Consulting Offer’s case coaches will answer them.

Other people prepping for consulting case interviews found the following pages helpful:  

• Common Types of Case Interviews
• The Profitability Framework  
• Case Interview Frameworks
• Business Situation Framework
• Market Sizing Cases
• M&A Case Study
• Revenue Growth Case Interview
• Cost Reduction Case Interview
• Pricing Case Interview

Help with Case Study Interview Prep

T hanks for turning to My Consulting Offer for advice on the market entry framework. My Consulting Offer has helped almost 89.6% of the people we’ve worked with get a job in management consulting. We want you to be successful in your consulting interviews too. For example, here is how Emma was able to get her offer from Bain.

Leave a Comment Cancel reply

Save my name, email, and website in this browser for the next time I comment.

© My CONSULTING Offer

3 Top Strategies to Master the Case Interview in Under a Week

We are sharing our powerful strategies to pass the case interview even if you have no business background, zero casing experience, or only have a week to prepare.

No thanks, I don't want free strategies to get into consulting.

We are excited to invite you to the online event., where should we send you the calendar invite and login information.

Hacking the Case Interview

Market entry case interviews are one of the most common types of cases you’ll see in consulting interviews. They are also known as go to market case interviews. There is a very good chance you will see at least one market entry case in your upcoming interviews, especially in first-round interviews.

The good news is that market entry cases are fairly straight forward and predictable. Once you’ve done a few market entry cases, you’ll be able to solve any market entry case that comes your way.

In this article, we’ll cover:

• Three types of market entry case interviews
• The five steps to solve a market entry case interview
• The perfect market entry framework
• A market entry case example
• Recommended market entry case interview resources

If you’re looking for a step-by-step shortcut to learn case interviews quickly, enroll in our case interview course . These insider strategies from a former Bain interviewer helped 30,000+ land consulting offers while saving hundreds of hours of prep time.

Three Types of Market Entry Case Interviews

A market can be broadly defined as the group of consumers that are interested in a particular product or service. There are three different types of market entry cases / go to market cases:  

• Entering a new geography
• Targeting a new customer segment
• Entering a new product or service category

In the first type of market entry case, the company is not launching a new product . Instead, the company is trying to sell an existing product to customers in new countries.

Example:  Uber  is a peer-to-peer ride-hailing company based in the United States. They are considering expanding their operations into Thailand. Should they enter? 

In the second type of market entry case, the company is also not launching a new product. Instead, the company is trying to sell a version of an existing product to a new customer segment. Customers can be segmented by a variety of different factors such as age, gender, needs, or preferences.

Example: Salesforce is a software company that provides customer relationship management tools. They primarily sell to large enterprises. Salesforce is considering expanding their customer base by also targeting small- and medium-sized businesses. Should they do this?

In the third and final type of market entry case, the company is looking to launch an entirely new product or service category.

Example: Coca-Cola is a large beverage corporation that produces soft drinks, sports drinks, fruit juices, teas, and other beverages. They are considering entering the vodka market. Should they enter?

The Five Steps to Solve a Market Entry Case Interview

Step One: Understand why the company wants to enter the market

The first step to solve any market entry case / go to market case is to understand why the company is looking to enter the new market. The four most common reasons are:

• The company wants to increase profit
• The company wants to increase revenues
• The company wants to invest in a fast-growing market
• The company wants to gain access to new customers

Only when you understand why the company is looking to enter the market will you have the context needed to properly assess whether or not they should enter.

Step Two: Quantify the specific target or goal

Now that you understand why the company wants to enter the market, identify what the specific target or goal is.

For example, if the company wants to increase revenues, how much of a revenue increase are they targeting? By what time frame are they looking to achieve this revenue increase by?

If the company wants to invest in a fast-growing market, what return on investment are they targeting? In how many years are they hoping to achieve this level of return by?

By quantifying the target or goal, you can more easily make the case for entering or not entering the market. If the company can achieve their goal, you would recommend entering the market. Conversely, If the company cannot reach their target, you would recommend not entering the market.

Step Three: Develop a market entry framework and work through the case

With the overall target or goal of the market entry in mind, you will now move onto gathering data and information to build support for your recommendation.

The most efficient way to do this is by using a market entry framework to structure all of the important questions you will need to answer.

We’ll go over the perfect market entry framework in the next section of the article, but there are four major areas of your framework:

Market attractiveness : Is this an attractive market to enter?

Competitive landscape : How strong are competitors and how easy is it to capture meaningful market share?

Company capabilities : Does the company have the capabilities to successfully enter the market?

Financial implications : Will the company achieve its financial goals or targets from entering the market?

Step Four: Consider the market entry strategy OR consider alternatives to entering the market

Your market entry framework will help you investigate different areas in the case to develop a hypothesis for whether the company should enter the market.

What you do next will be determined by whether you are leaning towards recommending entering the market or recommending not entering the market.

If you are leaning towards recommending entering the market…

Think through what the right market entry strategy would be. You should think through three different questions:

• When should the company enter the market?
• At what speed should the company enter the market?
• How should the company enter the market?

When should the company enter the market? Should they enter right away to get a first-mover advantage? Or should they wait to see how competitors enter the market and learn from their mistakes.

At what speed should the company enter the market? Should they target the entire market immediately? Or should they target a smaller subgroup to test their product first?

Finally, you should consider how the company should enter the market. There are three different ways to enter a market:

• Developing the capabilities internally
• Partnering or forming a joint venture
• Acquiring an existing company

Each of these strategies has their own advantages and disadvantages.

The main advantage of entering the market from scratch by developing capabilities internally is that the company has full control over the strategy and operations. The disadvantages are that this requires significant capital and investment costs, the company may not have all of the capabilities needed to be successful, and market entry will likely be slower than the other strategies.

The advantages of a partnership or joint venture are that there are much lower capital and investment costs and market entry will likely be faster than entering the market from scratch. The disadvantages of this strategy are that it requires working with the partner effectively and that this strategy does not give the company full control over the strategy and operations.

The advantages of acquiring an existing company are that it is a faster way of entering the market compared to the other strategies and that the company has a high level of control over the strategy and operations. The disadvantages are that acquisitions are expensive and it can be challenging to fully integrate an acquired company effectively.

If you are leaning towards recommending NOT entering the market…

Explore the other alternative options the company has. Is there another potentially attractive market that the company should enter instead? Are there other projects or investments that the company should pursue?

Remember that there is always an opportunity cost for each investment a company makes. If you are recommending that the company should not enter the market, what is the next best alternative?

Step Five: Deliver a recommendation and propose next steps

By this time in the case, you should have explored all of the major areas and questions needed to make a firm recommendation.

State your recommendation and then provide three reasons that support it. Conclude by proposing potential next steps.

Here are some potential areas to include for next steps:

• Areas of your framework you have not explored yet
• Open questions that have not been answered
• Information or data that would make you feel more confident in your recommendation

The Perfect Market Entry Framework

A market entry framework, or go to market framework, breaks down the complex question of whether or not the company should enter the market into smaller, more manageable questions.

You should always try to create a framework that is tailored to the specific case you are solving for. Do not rely on using memorized frameworks.

However, for market entry cases, there are four major things you should probably include in your framework.

1. Market attractiveness

For this area of your framework, the overall question you are trying to answer is whether the market that the company is looking to enter is attractive.

There are a number of different factors you can look at to assess the market attractiveness:

• What is the market size?
• What is the market growth rate?
• What are average profit margins in the market?
• How strong are substitutes?
• How strong is supplier power?
• How strong is buyer power?
• How high are barriers to entry?
• Are there other macroeconomic, geopolitical, or social factors to consider?

If you don’t have a strong business background, it may be helpful to review Porter’s Five Forces to better understand the five forces that determine the attractiveness of a market.

These five forces (supplier power, buyer power, substitutes, threat of new entrants, competitive rivalry) are already incorporated in this market entry framework.

2. Competitive landscape

For this area of your framework, the overall question you are trying to answer is how competitive the market is and how easy is it to capture meaningful market share.

The market can be attractive, but if it is extremely difficult to capture market share, then entering the market may not be a great idea.

There are a number of different factors you should consider in assessing the competitive landscape:  

• How many players are in the market?
• How much market share does each player have?
• Do players have competitive advantages?
• Do players have meaningful differentiation from one another?

3. Company capabilities

For this area of your framework, the overall question you are trying to answer is whether the company has the capabilities to successfully enter the market.

The market can be attractive and competition can be weak, but if the company does not have the right capabilities, they will not be able to successfully compete in the market.

There are a number of different factors you should consider in assessing the company’s capabilities:

• Does the company have significant capability gaps?
• Can the company leverage synergies with existing capabilities?
• Is the company in a favorable financial position to enter the market?
• Does the company have the right distribution channels?
• Does the company have the right relationships with suppliers?

4. Financial implications

The last area of your framework covers the financial implications of entering the market. The overall question you are trying to answer is whether the company will meet its financial targets or goals by entering the market.

Depending on what the specific goal of the market entry is, you may need to look into the following questions:

• What are the expected costs of entering the market?
• What are the expected revenues of entering the market?
• What are the expected profits from entering the market?
• How long will it take to break even?
• What is the expected return on investment?

Market Entry Case Example

Let’s put our strategy and framework for market entry cases into practice by going through an example of a market entry case.

Market entry case example:  Facebook  is an online social media and social networking service with $70B in annual revenue, $20B in annual profit, and roughly 2.5 billion users. They are looking to continue growing at a fast pace and are considering entering the global smartphone market. Should they enter?

Let’s go through the five steps we outlined above on how to solve a market entry case or go to market case.

In this case, we are told that Facebook is looking to enter the global smartphone market in order to continue growing. However, it is unclear what they are trying to grow. Is it revenues, profits, number of users, or something else?

We need to ask the interviewer a clarifying questions so that we can understand why Facebook wants to enter the smartphone market.

Question: Is Facebook specifically looking to grow revenues, profits, or number of users?

Answer: Facebook wants to grow profits.

Now that we understand that Facebook is looking to enter the smartphone market to grow profits, we need to quantify what their specific target or goal is.

Again, we’ll ask a question to the interviewer to get this information.

Question: Is there a particular financial goal or metric that Facebook is trying to reach within a specified time frame?

Answer: Facebook is looking to grow annual profits by $10 billion over the next year.

With this specific goal in mind, we need to structure a framework that will help us solve the case. We can use market attractiveness, competitive landscape, company capabilities, and financial implications as our four broad framework areas.

Then, we’ll need to identify and select the most important and relevant questions to explore in each of these areas. One potential framework could look like the following:

Let’s say that you gather the following data and information as you explore different areas of your framework:

• The global smartphone market size is $800 billion, which is large compared to Facebook’s annual revenues of $70 billion
• Facebook would need a 20% market share to break even
• The top six smartphone players have 80% market share, which implies high barriers to entry and fierce competition
• The top two smartphone players each have 20% market share
• There are limited synergies Facebook can leverage with its existing capabilities

At this point, we are leaning towards recommending that Facebook should not enter the market.

It is unlikely that Facebook will be able to grow annual profits by $10 billion over the next year. They already need 20% market share just to break even, which would tie them with the top two largest smartphone manufacturers.

Therefore, we should consider the alternative options Facebook has. Is there another market that may be worth entering? Are there other projects or investments that the company should pursue?

Thinking through potential markets, we think that Facebook is best suited to enter markets that can leverage its online platform. Potential markets may include the online travel booking market or the online gaming market.

Now it is time to summarize all of the work we have done so far into a clear and concise recommendation. One potential recommendation may look like the following:

I recommend that Facebook should not enter the global smartphone market for the following three reasons.

One, although the market size is massive at $800B, the smartphone market is highly concentrated. The top six players have 80% of the global market share. This implies that competition is fierce.

Two, Facebook would need to capture a 20% market share to break even. For comparison, the top two smartphone market leaders have 20% market share each. Therefore, this target does not seem feasible.

Three, barriers to entry are high and Facebook will likely not be able to overcome them. Facebook has minimal experience in producing hardware and they have no distribution channels with smartphone retailers.

All of these reasons strongly suggest that Facebook will not achieve its target profit growth of $10 billion over the next year. For next steps, we can look into other adjacent markets, such as the online travel booking and online gaming markets. These markets may be more attractive and feasible for Facebook to pursue growth in.

More market entry examples and practice

We've included two additional market entry practice case interviews below. Follow along with the video to get more market entry case interview practice.

For more practice, check out our article on 23 MBA consulting casebooks with 700+ free practice cases .

In addition to market entry case interviews, we also have additional step-by-step guides to: profitability case interviews , growth strategy case interviews , M&A case interviews , pricing case interviews , operations case interviews , marketing case interviews , and private equity case interviews .

Recommended Consulting Interview Resources

Here are the resources we recommend to land your dream consulting job:

For help landing consulting interviews

• Resume Review & Editing : Transform your resume into one that will get you multiple consulting interviews

For help passing case interviews

• Comprehensive Case Interview Course (our #1 recommendation): The only resource you need. Whether you have no business background, rusty math skills, or are short on time, this step-by-step course will transform you into a top 1% caser that lands multiple consulting offers.
• Case Interview Coaching : Personalized, one-on-one coaching with a former Bain interviewer.
• Hacking the Case Interview Book   (available on Amazon): Perfect for beginners that are short on time. Transform yourself from a stressed-out case interview newbie to a confident intermediate in under a week. Some readers finish this book in a day and can already tackle tough cases.
• The Ultimate Case Interview Workbook (available on Amazon): Perfect for intermediates struggling with frameworks, case math, or generating business insights. No need to find a case partner – these drills, practice problems, and full-length cases can all be done by yourself.

For help passing consulting behavioral & fit interviews

• Behavioral & Fit Interview Course : Be prepared for 98% of behavioral and fit questions in just a few hours. We'll teach you exactly how to draft answers that will impress your interviewer.

Land Multiple Consulting Offers

Complete, step-by-step case interview course. 30,000+ happy customers.

Market Entry Case Studies - A Comprehensive Overview

Market entry cases are a recurring theme in the management consulting interview process.

This is because consultants will frequently deal with market entry when working on real projects – which in turn means they are likely to base interview case studies on recent market entry work.

Releasing new products and entering new markets is fundamental to growing any business over time. Thus, CEOs across all sectors will be consistently confronted with market-entry issues - many of which then prove complex enough to mean bringing in the consultants!

Whilst this article will aim to give you a clear overview of market-entry theory and methods , a fully exhaustive treatment is impossible here. For a comprehensive view of market-entry and related issues, your first stop should always be our MCC Academy course .

Market entry: definition

So, what exactly is market entry?

In very simple terms, it’s exactly what you would expect: the process by which a company enters a new market.

In practice, things are a bit more complicated. However, the fundamental principle that the company is getting itself into a novel situation remains. Market entry scenarios (and implicitly market entry cases) can be divided into the following broad categories:

Geographical scenarios: when a company is trying to introduce a product in a new geographical region. An example of this would be Red Bull moving into the US market.

Product diversification scenarios: when a company is introducing a new product to an existing market. The attempts by Xerox to sell computers to their customers is one such instance.

New customer segment scenarios: when a company targets a new segment of an existing market with its products. For example, if Old Spice made a fragrance for women.

Covert Market Entry Cases

As mentioned, because market entry cases are interconnected with growth, you might come across an ‘incognito’ market entry case, where a consideration of market entry is necessitated to solve the initial problem.

This means you might come across a question - such as “How can Heineken increase its revenues?” - which is not explicitly about market entry, but for which any one of the market entry scenarios could be applied.

Old fashioned market entry frameworks can be hard to adapt to these trickier “hybrid” cases.

This general problem where idealised frameworks encounter complex cases is why we at MCC always teach you how to structure your answers for yourself - so that you can logically break down the questions you are given and deal with any market entry aspects in a flexible manner to fit the particular scenario.

What to consider when thinking about market-entry?

A typical market entry case might sound like this:

Ecobank is a South African bank looking to expand by moving into the Congo? Should they do this?

So, how should we tackle it?

As always, the most important thing to remember is that each unique case requires its own unique approach, tailored specifically for the situation at hand .

However, there are a few elements that recur in most market-entry cases and that are helpful when tailoring our analysis. Thus, we need to consider:

• The Company
• Strategies to enter the market

We’ll give a brief primer on each of these three elements over the rest of the article.

1.The Market

The first step for a company in any market entry scenario is to understand the market it’s engaging with.

In the real world, businesses continuously engage in market research, using different techniques in order to appreciate their market context.

For an example of how this then applies in a market entry context, McKinsey recommends having a reference class of previous entrants to similar (and sometimes different) markets. By doing so, companies can analyze the results of this class of previous entrants and draw better conclusions regarding the potential outcome of their endeavor.

McKinsey give the Segway as a case of failed market entry that could have been prevented. The company failed to anticipate that Segways would be confined to running on pavements rather than roads. Ultimately, they sold only 6000 units in its first 21 months as opposed to the 10,000 per week they had predicted.

If the sellers had evaluated a reference class including not only vehicles such as automobiles, fuel cell cars, hydrogen cars, but also technologies that were dependent on infrastructure like high-definition television and telephones, then Segway’s market entry might have been more successful.

However, these studies take time and money, so companies have to consider carefully what areas to inquire into.

In the same way you, in your case interview, need to think through what questions you want to ask about the market.

An unstructured, “laundry list” approach, where you just ask whichever questions come to mind will most likely irritate the interviewer. In the real world you need to be efficient when gathering expensive-to-acquire data, so asking efficient questions in the interview will be strong evidence that you can do so when it matters as well.

1.1. Market size

The first thing to determine is the size of the market being targeted. In some interviews this might be given to you as an existing figure. However, you will often have to estimate market size (read in our article on estimation ).

For example, imagine a company producing confectionery wants to expand its ice-cream business into the city of Milan. Before it does so, it needs to evaluate the potential client base.

You might start by guessing the population of Milan and then dividing it into people who are lactose intolerant (and therefore cannot eat ice-cream) or people who do not like ice-cream and people who are not lactose intolerant and do like ice-cream. You can make the assumption that each category is about 50% of the total population (remember to sense-check later). One segmentation might look like this:

Of course, there will be more than one way to segment and you will have to determine which one is most appropriate for your case. In the example above, for instance, you could have opted for a segmentation based on the age of population. As discussed in our full-length article on segmentation , make sure always to use a MECE segmentation scheme.

1.1.1. The Market Cycle and Growth

Market size is seldom static. Once you have determined (or have been given) the market size, you will have to understand how it will change over time – that is, you need to determine the market growth rate .

For example, a tech company seeking to launch a new smartphone can calculate current global demand for handsets, but will also need to factor in likely future demand as consumers in developing economies become wealthy enough to afford to buy.

Typically, the interviewer will be able to provide you with information on market growth on request.

A market goes through several phases and usually, the further along in its life cycle it is, the less likely it will be for the company entering it to make profits.

Therefore, a market early in its life cycle presents more opportunities for entrants . For example, Apple registered huge revenues with its pioneering entry into the smartphone market.

Normally, a company should avoid entering a declining phase, as this means that consumer demand for a certain service or product is dwindling or new alternatives have rendered it obsolete.

However, fast-growing markets also experience severe shakeouts – which means that, after a period of massive expansion, one of consolidation generally follows. At this stage, bigger, stronger companies use their resources to acquire or get rid of weaker ones.

Additionally, the first mover’s advantage – that is entering a certain market before the competition does – will not always translate to higher profits .

Rather, there is a high chance that companies entering later will learn from the mistakes of the first movers. Later entrants will then leverage that negative experience into improving their product, which will likely lead to higher profits.

While Google’s position as the search engine might seem perennial, in fact it climbed to the top by learning the does and don’ts from pioneers like Altavista and Ask Jeeves.

1.2 Market dynamics

Economist Michael Porter argued that, to understand a market, you need to understand the various forces that can put pressure upon it and how they function. He divided these up into five forces:

• Buyers’ power
• Suppliers’ power
• Threat from substitutes
• Threat from new entrants
• Industry rivalry

Porter’s idea can be captured visually as follows:

Let’s look at what each of them means and how they interact with one another and the market as a whole.

1.2.1 Buyers’ power

The main things you need understand about buyers when entering a new market are:

How many there are

Whether the products they are purchasing are generally available (commodities) or unique

These factors are significant in establishing the influence that buyers can have on the market. As Porter explains, there are a few scenarios in which buyers’ power is high. These include:

When buyers purchase in bulk, their purchase power is concentrated . For example, large soft drinks manufacturers purchasing aluminum cans have the upper hand because they buy in bulk and can dictate the price.

When the products they purchase are not differentiated and therefore can be sourced from multiple suppliers. For example, in the steel industry, the product is virtually identical and can be bought from many manufacturers.

When the products purchased make up a high fraction of the cost of the buyers’ own product . Naturally, in this scenario, the buyer will be very conscious about the price, as it will impact their own pricing as well. For a car manufacturer, the more expensive the steel the car is made of, the more expensive the car. This will mean suppliers will have to keep prices low to attract any purchases in the first place.

1.2.2 Suppliers’ power

The same three factors are equally important when considering suppliers:

Their number

How big they are

Whether they are dealing in unique products or commodities

These also determine buyers’ power in the market. According to Porter, buyer’s power is high when:

There are only a few suppliers and they are concentrated . Again, the soft drinks market is a perfect example of how a few major players can dictate prices. Companies that bottle soft drinks have very little choice when determining their suppliers and must accept the price they dictate.

Suppliers offer a differentiated product and/or the switching costs to a different product are high . Where a school’s entire teaching infrastructure is built around Google Classroom, associated costs will make them reluctant to switch to a different product.

Suppliers are not forced to compete with other products. For instance, furniture manufacturers can choose whether to make tables out of steel or aluminum, which keeps in check the prices of companies producing each metal.

For a detailed analysis of the power of buyers and suppliers, check out the Marketing 101 and Strategy 101 sections of the MCC Academy .

1.2.3 Threat from substitutes

The existence of substitutes or alternatives to products will also determine the profitability of a market. The existence of one or more substitutes can cause the industry to plateau and eventually decline.

For example, cash is a potential substitute for credit cards but presents a low threat to the credit card industry since it is to be expected that technological advances will eventually render it obsolete.

However, mobile pay platforms such as PayPal and TransferWise might eventually cause credit card usage to decline and with it the industry.

1.2.4 Threat from new entrants

The potential entry of new players in the market can also lead to its destabilization.

For example, with the arrival of the iPhone, the mobile phone market had to re-prioritize to face the new threat. Nokia , an industry giant, then holding 51% of the market, failed to do so, nearly went bankrupt and was eventually acquired by Microsoft.

However, market destabilization is highly dependent on the type of industry and the barriers that are set in place for those wishing to enter . The size of these barriers determines whether new players will have a hard or an easy time on the market.

For example, the pharmaceutical industry is very profitable, but has a high barrier for entry in the form of regulatory practices. New medicines need to be tested thoroughly, in turn leading to long delays and high manufacturing costs.

Alternatively, the food market has relatively low barriers to enter, hence the constant emergence of new food trucks and delis.

Let's have a closer look at some of the main barriers to entry in a market, as identified by Porter:

      1.   Costs

Entry to certain markets is impeded by high initial costs , which may be difficult or impossible to recover. These take the form of capital expenditure for new facilities, R&D and advertising, but also come from coming up against economies of scale .

In other words, incumbent companies might have concentrated so many resources (in production, research, marketing etc.) that they will be able to produce at minimal cost.

Additionally, companies new to a market may incur other costs related to a steep learning curve, which incumbents will not.

An example of a market with high-cost entry barriers is the computer manufacturing industry, where the costs or research and development are very high.

2. Branding

In certain industries, market entry will be made difficult by  brand loyalty , where new companies will have to incur significant costs to overcome the inertia of customer loyalty.

In the soft drinks world, players like Pepsi and Coca-Cola dominate the market and have well established brands. Market entrants will need to differentiate their product in some way – such as Dr Pepper’s emphasis on its unique flavor.

3. Access to distribution channels

New companies will need access to means of distribution, which can prove difficult if competitors monopolize them.

The only way out in some situations would be for the new entrant to create its own distribution network , which may prove very costly and negate potential profits.

Timex is an example of a company which met with such high distribution costs that it had to develop its own network.

4. Government regulations

Governments may restrict access in the case of certain markets by requiring licensing (such as in the alcohol industry) or limiting access to raw materials.

Legislation can also indirectly deter market entrants through environmental legislation or safety regulations, as we saw above for the pharmaceutical industry.

1.2.5 Industry rivalry

One of the most important things to understand when considering market-entry is potential competition and degree of market fragmentation.

There two paradigm kinds of market are:

Fragmented markets

Concentrated markets

Fragmented market

In a fragmented market, there are many players and each controls a small portion of the market . Typically, barriers for entry are low and the market is very competitive if players don’t differentiate between their products.

The retail clothing market is a good example of a fragmented market. There are many brands, with none really having monopoly of the market and offering similar types of apparel, which sparks competition. Raw materials are also easy to source and available from many sellers.

Below is a pie-chart showing a hypothetical fragmented market:

Concentrated market

In a concentrated market, there are few players controlling most of the market , usually with high barriers for entry . Players might engage in price wars or, alternatively, try to control a specific segment of the market. The soft drink market is a good example here again.

Here’s what concentrated markets typically look like:

It is important to understand what competitors do well and what they specialize in, since you will have to analyze them in comparison to your client’s company.

A good idea is also to look at what share of the market your competitors control, so that you have a realistic idea of what market share your company can hope to gain.

1.3 Customers

Customers are possibly the most important factor when considering market-entry, since they are at the center of most of company strategies.

You should get a good grasp of who the customers are in the proposed market, how they behave and what  they look for.

This crucial information will then be used in conjunction with information you have about the company to determine whether the market is a good fit (see below).

You will likely also need to segment the market appropriately to determine where the company should operate, given its strengths and weaknesses.

For example, if your client is a domestic European airline known for low prices seeking to expand operations to service North American routes, you will most likely target customers looking to travel on a budget.

2. The Company

As a consultant, after you've understood what kind of market you’re dealing with, you must turn your attention to the client. There are three aspects you should consider:

Company profile

Essentially you want to understand the company’s brand , what it’s good at and how it’s perceived by customers.

For example, Coca-Cola is a top player in the soft drinks industry, with extensive experience producing and selling soft drinks. Its very strong brand image means customers generally consider it to be number one fizzy drink.

The value proposition

Here, you will want to determine what value the company needs to bring in order to enter its proposed market, as well as what skills are necessary to enter it and whether the company possess them.

Then you will want to determine whether the company’s brand and values are in line with those of its targeted consumers .

For example, a new energy drink company might struggle in targeting the Californian market, where a large fraction of consumers are very health conscious.

Similarly, Starbucks failed to penetrate the Australian market because, for Australians, Starbucks' offerings were simply too expensive. Furthermore, customers had a strong preference for smaller, local alternatives.

Capabilities and targets

Crucial here is what the company’s objective is and whether it would be able to compete in the proposed market. Would the costs of entering the market still allow for profitability?

Say a new soft drinks company wants to enter the global market and sets a market penetration target of 20% in the first year. However, the top two companies in the industry each hold close to that percentage of the market. This clearly wouldn’t be a realistic objective.

Here, information about previous attempts to enter the market from companies with similar profiles would be useful for comparison. Again, the interviewer can provide this information.

3.Strategies to enter

If, after evaluating these two main criteria, you decide that market entry is the right thing to do, you then need to consider your entry options.

There are three main possibilities:

Enter the market organically

Merge with, acquire or conduct a joint venture with another company already in the market

Enter through a distributor

Let’s have a look at the pros and cons of each of these systematically – just like consultant!

Organic entry

Pros : Although this means that you will enter the market without any prior contact with it, you will be in complete control over the strategy you formulate and how the company operates.

Cons : Organic entry will require significant capital expenditure – you need to make sure that your company has the capabilities (financial and otherwise) necessary for this effort. It will also be much slower than the other two options.

Uber launching on the Chinese market is an example of such organic entry.

Pros : The advantages of acquiring an existing player in the market would be that the company still retains control and it is a fast way of penetrating the market. The situation would be similar in the case of a merger, although control would be more equivocal. A joint venture would also be a quick route to entry, entailing even lower costs.

Cons : The disadvantage of a merger or acquisition would be the potentially high costs of the process, as well as the ability to fully integrate the two companies and take advantage of any synergies between them. In the case of a joint venture, the main disadvantage would be the possibility that the two companies will not see eye to eye on strategy and operations and therefore will not work well together.

Many law firms choose the M&A route to gain quick access to markets by partnering with local firms.

Selling through a distributor

Pros : If you decide to sell through a distributor you will reduce costs whilst accessing the distributor’s existing network and connections.

Cons : You will have very little direct control over strategy and operations and there will be less opportunity for you to prioritize your product if the distributor is acting on behalf of more than one company.

For example, Apple chose to use IStyle as a distributor to enter the Romanian market rather than build its own distribution chain from scratch.

Formulating a strategy

Once you’ve decided that your company needs to go through with market-entry and have decided which option to go with, you will need to determine your actual strategy.

Bear in mind that, depending on which of the three options you choose, there will be more or less scope to implement this strategy. For now, let’s assume that you’ve decided to enter the market organically.

Three key things you’ll have to consider when devising an actual marketing strategy are:

Segmentation

Positioning.

This means you’ll start off by breaking up the population of a target market into consumer groups. This can be done in several ways, such as:

Demographics

For example, Starbucks, trying to enter the Italian market, might divide the population as follows:

In this case, we have opted for a need-based segmentation that will allow you to take the next step, which is target your customer group.

There are several elements to consider here:

Size – is the segment we want to target big enough and will it generate the revenue that the company is looking for?

Profitability – how profitable is the targeted segment?

Growth – is the segment of the market chosen growing or shrinking?

Fit – does the segment fit with what the company offers and its strengths?

A company could, of course, choose to cater to the entire market but this would be difficult and generally undesirable . Think of Nokia again, who couldn’t figure out what its customer base was after the emergence of smartphones and got ‘stuck in the middle’, trying to do everything and eventually losing its position.

Let’s say Starbucks has decided to target the segment of regular drinkers since, it’s both the most profitable (pretty much everyone in Italy frequently drinks coffee) and fastest growing.

Taking all these factors into consideration and learning from its mistakes in Australia, Starbucks has decided it can’t compete with local coffee shops in price and wants to instead position itself as a premium coffee seller. As such, it will further target the high-revenue consumers (who make over 35k a year) who drink coffee regularly – primarily time poor business people who will benefit most from Starbucks' fast, quality service.

This article is a great primer, and gives you a solid introduction into to the key ideas around market entry theory. As such, it should be immediately useful when practicing market-entry case studies.

However, if you want to perform in top level interviews, you are going to need more detailed knowledge and to learn how to apply it. In particular, you will have to deal with more complex cases, where market entry overlaps with other concerns.

This is where generic frameworks fail most notably. They might (perhaps) cover simple, idealized cases, but real-life scenarios are never so clear cut – and navigating this complexity is how consultants earn their fees! So, in order to cope with tough questions in interviews for top firms, you need to be able to cope with realistically complex, unique cases.

Learning How

The MCC Academy is your ideal tool here! It is a structured course that will provide you with all the detailed knowledge you need in order to solve these more demanding cases, including business fundamentals in its Case Interview Foundation and Building Blocks sections.

You will also need to practice seriously to form the mental muscle memory necessary to quickly structure and solve cases. Our extensive case library and meeting board give you the opportunity to practice both individually and with other applicants.

Work with the Pros

However, while practicing with peers is useful, there’s only so far you can get when neither of you has any real consulting experience.

The best way to practice is with a real consultant, and our coaching program provides you with a way to do just that! It is designed to give the best possible interview preparation and feedback by MBB consultants with at least two years of experience in the field.

All of this prep that’s required might seem like a lot to take in – especially if you are working or studying at the same time. Fear not, though! Our comprehensive mentoring program will streamline everything for you!

It is the full package, making most efficient use of your time by having an MBB consultant plan and oversee your entire prep–from planning your CV and cover letter to learning business fundamentals, through to final case practice.

Candidates who sign up to our free services are 3 times more likely to land a job in one of their target firms . How?

• We teach how to solve cases like consultants , not through frameworks
• Our Meeting Board lets you practice with peers on 100+ realistic, interactive cases.
• Our AI mentor creates a personalised study roadmap to give you direction.
• All the advice you need on resume, cover letter and networking.

We believe in fostering talent, that’s why all of the above is free .

Account not confirmed

Market Entry Framework: The Expert Guide

Unlock success in new markets with our expert guide! Learn the market entry framework step-by-step and discover strategies to thrive in today’s competitive landscape.

Posted August 20, 2024

Featuring Garrett W.

MBB Interviews: Ask Me Anything

Starting friday, august 23.

7:00 PM UTC · 60 minutes

Table of Contents

Are you ready to conquer new markets and expand your business horizons? The market entry framework is your secret weapon for success. This powerful tool has revolutionized the way companies approach new territories, giving them a strategic edge in today's competitive landscape.

In this expert guide, we'll walk you through the ins and outs of the market entry framework. You'll discover what a market entry case interview entails and how to apply this framework step-by-step. We'll also explore market entry examples, discuss effective marketing strategies, and highlight how to build competitive advantages. By the end, you'll be well-equipped to tackle any market entry challenge that comes your way. Are you ready? Let’s begin!

What is a Market Entry Case Interview?

A market entry case interview is a crucial component of the consulting recruitment process. It's designed to evaluate your ability to analyze and solve real-world business challenges. In this type of interview, you're asked to assess whether a client company should enter a particular market. This scenario mirrors the work consultants often do, making it a popular choice among interviewers.

During a market entry case interview, you'll need to tackle complex questions that CEOs typically face when considering expansion. These might include:

• Is the market profitable?
• Does the company have the necessary skills to compete?
• Are there sufficient financial resources for a successful entry?
• Should capabilities be developed in-house, acquired through purchase, or formed through a joint venture?
• What regulatory hurdles might arise?

The high stakes and complexity of these decisions explain why executives often turn to consultants for guidance.

Types of Market Entry Cases

Market entry cases generally fall into three main categories:

• Geographic Market Entry : This involves evaluating whether a company should expand into a new geographical area. For example, you might be asked to assess if Amazon Go should enter the UK market.
• Product Expansion : These cases focus on launching new business lines in existing markets. An example could be analyzing whether Disney should start its own streaming service.
• New Customer Segment : This type involves considering if a company should offer an existing product to a new customer group. For instance, you might evaluate if KFC should serve premium fried chicken to wealthy customers.

It's important to note that while these are common types, you may encounter variations or combinations of these scenarios in your interview.

Importance in Business Strategy

Market entry cases hold significant importance in business strategy for several reasons:

• Growth Driver : Releasing new products and entering new markets is fundamental to growing any business over time.
• Skill Assessment : These cases test a variety of skills that consultants value highly, including structured problem-solving, logical reasoning, and creativity.
• Real-world Relevance : Consulting firms frequently help clients with market entry problems, making these cases a reflection of actual consulting work.
• Strategic Decision-making : Market entry decisions are complex and high-stakes, often requiring the expertise of consultants to navigate successfully.

By mastering market entry cases, you're not only preparing for your interview but also honing skills that are crucial in the consulting world. Remember, each case you encounter will have its unique nuances, so approach them with a flexible and analytical mindset.

Step-by-Step Guide to Applying the Framework

To effectively apply the market entry framework, you need to follow a structured approach. This guide will walk you through the essential steps to evaluate and execute your market entry strategy .

Assessing Market Attractiveness

The first step is to determine if the target market is worth pursuing. You'll need to analyze various factors to gage the market's potential:

• Market size and growth rate : Evaluate the existing market size in terms of revenue and its projected growth rate .
• Profit margins : Assess the average profit margins on sales in the market.
• Break-even analysis : Calculate the market share required to break even and become profitable.
• Political stability : Consider the market's political environment to ensure sustainable long-term business operations.

Evaluating Internal Capabilities

Next, you need to assess your company's ability to compete effectively in the new market:

• Technical skills : Determine if your company has the necessary technical expertise to produce the product or provide the service.
• Cost structure : Analyze your cost structure to ensure it's competitive in the new market.
• Distribution channels : Evaluate your existing sales and distribution channels and their suitability for the new market.
• Market understanding : Assess your company's knowledge of customer segments and ability to tailor products or services to meet local requirements.

Analyzing Financial Implications

A thorough financial analysis is crucial to determine the feasibility of market entry:

• Investment costs : Estimate the fixed costs required for market entry, including research and development, manufacturing capacity, and marketing launch.
• Payback period : Calculate how long it will take to recover the initial investment.
• Capital availability : Assess whether your company has or can raise the required capital for market entry.
• ROI analysis : Conduct a return on investment analysis to measure the profitability of your market entry strategy.

Developing an Execution Plan

Once you've determined that market entry is feasible, it's time to create a detailed execution plan:

• Entry mode selection : Choose the most suitable entry mode , such as exporting, licensing, franchising, joint ventures, or greenfield investments.
• Timeline : Propose a specific timeframe for your expansion strategy, considering factors like first-mover advantage.
• Resource allocation : Outline the allocation of financial, human, and technological resources for the market entry.
• Key objectives : Specify the main goals to be implemented, including tasks, responsibilities, and execution methods.

By following this step-by-step guide, you'll be well-equipped to apply the market entry framework effectively and make informed decisions about expanding into new markets.

Free trial!

From 128 top coaches

Access a library of videos, templates, and examples curated by Leland’s top coaches.

Example resumes.

Example Cases

Casing Drills

Mock Interviews

Example of The Market Entry Framework: McDonalds in Australia

McDonald's entry into the Australian market serves as an excellent example of successful market entry strategy. The fast-food giant first arrived in Australia in 1971 and has since expanded to over 900 stores across the country , directly employing more than 100,000 people. This remarkable growth demonstrates the effectiveness of McDonald's approach to market entry and expansion.

1. Market Assessment and Strategy

McDonald's Australia's success can be attributed to its commitment to addressing changing consumer values and market needs. The company has shown a keen ability to listen and learn from its customers. This approach has been crucial in adapting to the increasing importance of health and fitness in the 21st century, with consumers demanding healthier food options.

To implement changes effectively, McDonald's Australia first identified exactly what those changes should be. This involved careful market research and analysis of consumer trends. The company then focused on communicating these changes to consumers, recognizing that effective communication is as important as making the changes themselves.

2. Operational Structure and Expansion

McDonald's Australia operates with a centralized structure, with its head office in Sydney, New South Wales, overseeing all operations and support activities. This centralization allows for efficient management and consistent quality across all locations. The company also maintains a close working relationship with its franchisees, with approximately 70% of McDonald's restaurants in Australia owned and operated by franchisees.

The expansion strategy of McDonald's in Australia involves both public and company-owned site development. This approach has allowed for rapid growth while maintaining quality control. The company offers different types of franchise agreements, catering to both small and medium franchisees.

3. Strengths and Challenges

One of McDonald's main strengths in Australia is its vast structure, with about 750 chains or restaurants across the country. This extensive network ensures that McDonald's products are within reach of most Australians. The company's ability to sustain a personal relationship with its worldwide customers and guarantee the quality of its products and services has been a key factor in its success.

However, McDonald's also faces challenges in the Australian market. These include logistical issues related to food distribution across its numerous stores, complex human resource management for over 78,000 employees, and a reputation for unhealthy food in an increasingly health-conscious market.

Despite these challenges, McDonald's Australia continues to adapt and thrive. By focusing on customer service, product adaptation, and community involvement, the company has maintained its position as a leader in the Australian fast-food industry.

What Is the Importance of Market Entry Frameworks?

Market entry frameworks are essential tools for businesses looking to expand into new markets or introduce new products. These strategic blueprints help companies navigate the complexities of entering unfamiliar territories, ensuring a more structured and informed approach to growth.

Mitigating Risks

One of the primary benefits of using a market entry framework is its ability to help you identify and mitigate potential risks. Entering a new market is fraught with challenges, including financial, operational, strategic, compliance, and reputational risks. By using a framework, you can:

• Conduct thorough pre-entry risk assessments
• Analyze market conditions and internal capabilities
• Develop tailored mitigation strategies for each type of risk

For example, to address financial risks, you might consider diversifying funding sources or setting up contingency funds. For operational risks, you could focus on building robust supply chains and implementing efficient processes.

Identifying Opportunities

Market entry frameworks also play a crucial role in helping you spot and capitalize on new opportunities . They provide a structured approach to:

• Assess market size and growth potential
• Analyze customer needs and preferences
• Identify gaps in the market that your product or service can fill

By conducting a comprehensive market analysis , you can uncover valuable insights that inform your entry strategy. For instance, Coca-Cola used a rigorous market entry framework when entering the Indian market in the early 1990s, which helped them overcome challenges related to taste preferences and cultural norms.

Guiding Decision-Making

Perhaps the most significant importance of market entry frameworks lies in their ability to guide decision-making. These frameworks help you answer three critical questions:

• Should you enter the market?
• Can you enter the market?
• How should you enter the market?

By providing a structured approach to evaluating these questions, market entry frameworks enable you to:

• Make informed decisions based on data-driven insights
• Allocate resources more effectively
• Increase your chances of success in the new market

For example, when assessing whether to enter a market, you'll evaluate both internal motivations (company assessment) and external factors (market assessment). This comprehensive approach ensures that your decision is based on a holistic understanding of the opportunity and your capabilities to capitalize on it.

In today's competitive business landscape, using a market entry framework can be the difference between success and failure when expanding your operations. By helping you mitigate risks, identify opportunities, and guide decision-making, these frameworks provide a valuable roadmap for growth and success in new markets.

5 Tips On Using The Market Entry Case Framework

To effectively use the market entry case framework , consider these five essential tips:

1. Structure Your Approach

Begin by organizing your thoughts using the three key questions: "Should I enter?", "Can I enter?", and "How to enter?". This structured approach helps you systematically assess the opportunity, evaluate feasibility, and plan implementation.

2. Conduct Thorough Market Assessment

When determining if you should enter a market, perform a comprehensive market assessment. Consider factors such as market size, growth rate, customer demographics, competitive landscape, and industry life cycle stage. This analysis will help you gauge the revenue opportunity and potential market share.

3. Evaluate Internal Capabilities

Assess your company's readiness to enter the new market. Examine your product offerings, organizational structure, and operational processes. This evaluation ensures you have the necessary capabilities to succeed in the target market.

4. Perform Detailed Financial Analysis

Before making a decision, conduct a thorough economic analysis. Calculate estimated costs and revenues, forecast the payback period, and determine the expected ROI. Don't forget to consider potential risks, including technological and legal challenges.

5. Build a Strong Brand and Reputation

A robust brand and reputation can significantly impact your market entry success. To achieve this:

• Define and communicate a clear brand identity and value proposition
• Ensure consistency across all products, services, and customer touchpoints
• Provide exceptional customer experiences throughout the entire journey
• Leverage social media and online platforms for cost-effective outreach
• Actively manage your online reputation

By following these tips, you'll be better equipped to navigate the complexities of market entry cases and make informed decisions about expanding into new markets or introducing new products.

Land Your Dream Consulting Job With the Help of an Expert

Trying to enter into the world of consulting is no small feat. That’s why at Leland, we have a broad network of world-class coaches who know what it takes to get into a consulting job and are ready to help review your resumes, conduct practice interviews, and give you refreshers on key skills needed to land the job. Browse our expert coaches here and find the highest-rated ones below.

The market entry framework serves as a powerful tool to guide businesses in their expansion efforts. It provides a structured approach to analyze potential markets, evaluate internal capabilities, and devise effective strategies for success. By using this framework, companies can minimize risks, identify lucrative opportunities, and make well-informed decisions about entering new markets or launching new products.

To make the most of the market entry framework, businesses should focus on conducting thorough market assessments, evaluating their internal readiness, and performing detailed financial analysis . Building a strong brand and reputation is also crucial to succeed in new markets. By following these guidelines and adapting to local conditions, companies can increase their chances of thriving in unfamiliar territories and achieving sustainable growth.

What exactly is a market entry framework?

• A market entry framework is essentially a strategic plan that businesses use to introduce their products or services into a new market. This could involve expanding into a new geographical location, reaching out to a different customer base, or entering an entirely new industry sector.

What are the primary strategies for entering a market?

• There are numerous strategies for market entry, particularly for international expansion. Five of the most commonly used methods are exporting, licensing, franchising, forming joint ventures, and making greenfield investments.

How do companies decide on their market entry strategies?

• Companies utilize the Market Entry Strategy Framework to determine the most suitable approach to enter a new market. This framework considers various factors including the size of the market, level of competition, regulatory landscape, cultural differences, and the balance of risks and rewards.

What does a market entry strategy entail?

• A market entry strategy provides detailed information on your business objectives, a comprehensive analysis of the target market, the products or services you plan to offer, projected sales, and the strategies to achieve these sales. Implementing a typical market entry plan can range from six months to 18 months.

Preparing for consulting interviews? Here are some additional resources to help:

How to Answer the "Why Consulting" Interview Question

• 50+ Case Interview Questions From Top Firms

The Expert Guide to Market Sizing Questions (With Examples)

• Big 4 Consulting Firms vs. MBB: What's the Difference

The Ultimate 2024 Consulting Interview Prep Guide

Browse hundreds of expert coaches.

Leland coaches have helped thousands of people achieve their goals. A dedicated mentor can make all the difference.

Browse Related Articles

August 20, 2024

Case Interview Math Guide: Everything You Need to Know

Master case interview math with our friendly guide! Learn essential tips, tricks, and strategies to ace every calculation and impress in your consulting interviews.

August 19, 2024

The Top 10 IT Consulting Firms (2024)

Explore the top 10 IT consulting firms of 2024. Discover industry leaders shaping the future of tech with innovative solutions and expertise.

August 16, 2024

How to Answer "Tell Me About Yourself" in Consulting Interviews

Learn how to craft a compelling answer to the 'Tell me about yourself' question in consulting interviews with tips, examples, and expert advice.

Top Pre-MBA Programs in Consulting

Discover the top pre-MBA programs for consulting. Learn how to boost your skills and gain a competitive edge before starting your MBA journey.

BCG Matrix: What to Know and How to Use It

Learn how to use the BCG Matrix for strategic planning. Explore key insights and tips to maximize growth and profitability in your business.

The McKinsey Sophomore Summer Business Analyst Program: What to Know

Learn what to expect from McKinsey's Sophomore Summer Business Analyst Program. Get insights, tips, and advice for a successful application.

Looking for an expert guide to market sizing questions? Learn how you can use the examples, key techniques, and frameworks to ace your consulting interviews by reading this article.

Discover top strategies for answering the "Why Consulting" interview question. Learn how to highlight your passion and fit for the consulting role.

Get ready for your consulting interview with our 2024 prep guide! Find expert tips, strategies, and resources to help you ace your interview.

Bain Cover Letter: The Expert Guide

Master your Bain cover letter with expert tips. Learn how to showcase your skills and stand out in the competitive consulting application process.

How to Excel in Mental Math Practice: A Comprehensive Guide

Boost your mental math skills with our comprehensive guide! Learn practical tips and techniques to excel in mental math and enhance your problem-solving abilities.

May 18, 2023

Victor Cheng LOMS: Is It the Ultimate Guide to Case Interviews?

Discover the ultimate guide to acing case interviews with Victor Cheng's LOMS program.

Mastering the Market Entry Framework for Case Interviews

Table of contents.

Consulting firms use a special type of interview, called a case interview , to test whether candidates have the skills to understand and solve real business problems.

One common example of a case interview question is a market entry question. And this covers both launching new products and entering new geographies, so it’s considered one of the most challenging types of case interview questions.

In this article, we will teach you how to recognize and ace market entry case interview questions. And you can also check out our guide to profitability case interview questions too.

Overview of the market entry framework

What is a case interview framework.

A framework is a template that can be applied to break down and solve case study questions. It aids candidates by giving them a clear approach to resolving the case question they are given. 

However, frameworks are just a starting point. They should be customized according to your own thinking and understanding of the case question.

What is the market entry framework?

Market entry framework is a tool to assess and evaluate the viability of entering a new market for a company, this could be the development of a new product or entry into a new geography.

There are 2 main types of market entry cases:

• Geographic Entry : These types of cases ask the candidate to evaluate whether a company should venture into a new geography. For example, standard expansion, joint ventures, mergers, and acquisitions. For example, Lyft might want to venture into Europe or Amazon might want to expand its business into Asia by purchasing a local distributor.
• Product Entry: These types of cases ask the candidate to evaluate whether a company should diversify its product range or launch a new product line. For example, Pepsi Co might be looking to expand into the alcoholic beverages market or Tesla might be looking to expand into the airline industry.

How to apply the market entry framework

There are four steps to apply to the market entry framework in a case interview, including:

• Desirability: Do we want to enter the market?
• Feasibility : Do we have the right people, processes, and technology to enter the market?
• Viability : Can we make the market entry business case work?
• Execution plan : How do we enter the market?

Step 1. Assess the target market (desirability)

The first step is to assess if you should be entering the new market. You should ask questions like:

• How big is the revenue opportunity?
• Is the target market growing and how quickly?
• Are there desirable customer demographics in the target market?
• What is the competitive landscape in the target market?
• What stage of the industry lifecycle is the market in?
• What share of the market can we reasonably expect to capture?

Step 2. Evaluate internal capabilities (feasibility)

The second step is understanding whether our company has the internal capabilities to enter the market successfully. You should ask questions like:

• Are our current product offerings / new product offerings suitable for the target market?
• Do we have an appropriate organizational structure and operating model for the target market?
• Do we have sufficiently robust processes to scale up successfully?

Step 3. Analyze investment case (viability)

The third step is determining whether it makes economic sense to enter the new market. You should ask questions like:

• What are the estimated costs and revenue of entering the new market?
• What is the forecast payback period for any investment?
• What is the expected ROI of entering the new market?
• What are the main risks? (e.g. technological, legal, etc)

Step 4. Build an execution plan

Once you have identified and shared key considerations for market entry to your interviewer, they will often ask you how the company should enter the market.

To answer this accurately, you need to build an execution plan.

The execution plan requires you to synthesize all the information you have gathered so far and make recommendations as to how the company should enter the market.

The key questions you should answer in your execution plan include:

• How should you expand into the new market? In the case of a product expansion question, this is build vs partner vs license. And in the case of a geographic expansion question, this is expand organically (greenfield) vs enter a joint venture vs partner vs acquire a competitor.
• What is the timeline? Propose a timeline for entering the market based on the market and competitive dynamics.

Download 183 practice case interviews and over 851 pages of interview guides

The ultimate case study preparation package. Download practice cases from McKinsey, BCG, Bain, Harvard, Kellogg, Columbia, INSEAD, Cornell, and more!

Example market entry case interview questions

Example 1: grocery chain.

A grocery chain in New England is considering offering an Internet delivery service (i.e., groceries can be ordered via the Internet and delivered directly to your home). Including the client, there are three main grocery chains in the area. One of them has already entered the Internet market. The only other grocery store currently offering Internet delivery service in the U.S. is a Midwest store.

Should the client enter this market? If so, what issues would they face? If not, how should they protect their market share?

Example 2: Corn feed company

A corn feed company has eight manufacturing plants located in the Midwest. These plants service the entire United States. Their plant in Ohio is in need of refurbishing. The company has four possible options:

• Refurbish the existing plant
• Build a larger plant at the current location
• Build a similar size plant at a new location
• Build a larger plant at a new location

Which is the best option for this plant?

Example 3: Gas manufacturer

Your client is a gas manufacturer. Currently, the client owns and operates its gas plants nationwide. They have hired you to investigate whether they should enter into the business of running 3rd party gas plants. How will you structure the analysis of this case? Should the client enter or not enter into this business?

Example 4: Construction firm

An overseas construction firm wants to expand by establishing a presence in a growing U.S. regional market. What factors should it consider? How should it go about doing this? What factors are critical for its success?

Example 5: Chicken vitamin manufacturer

Your client is a chicken vitamin manufacturer. The vitamin helps increase the size of chicken breasts and reduce fat content. Should they enter China?

Example 6: Travel agent

An Israeli travel agent has been extremely successful. His primary source of revenue is customers who fly to and from the U.S. He manages to fill up over two planeloads on a daily basis. Given his success, he is considering buying an aircraft and flying the U.S.- Tel Aviv route himself. What advice would you give him?

Example 7: Food processing company

You have been hired by a food processing company that recently introduced a new hot dog to the market. Sales in the first two weeks have far exceeded the marketing department’s projections. Your client thinks he may need to add more capacity. What advice would you give him?

Example 9: Airline

A major American airline is considering establishing new routes from Tokyo to several sites in the United States. Would you recommend this action to your client?

Beating the odds in market entry

The annals of business history report that for every successful market entry, about four fail. Inexperienced start-ups suffer some of these disappointments, but so do many sophisticated corporations and seasoned entrepreneurs who should know better. After all, industrial economists and strategists generally agree about what makes market entrants successful: factors such as timing, scale relative to the competition, and the ability to leverage complementary assets. Moreover, the magnitude and importance of entry decisions—encompassing everything from geographic expansion to new products to diversification efforts—should prompt detailed analysis.

But cognitive biases —systematic errors in the way executives process information—often wreak havoc on market entry decisions. 1 1. Behavioral economists have written extensively about the impact of cognitive biases on financial markets and on a wide range of decisions. See Charles Roxburgh, “ Hidden flaws in strategy ,” McKinsey Quarterly , 2003 Number 2, pp. 26–39 for an overview of the relationship between cognitive biases and strategic mistakes, as well as a partial summary of the broader literature on this topic. For one thing, when confronted with a difficult decision, most executives rely solely on an inside view: they focus excessively on the specific case at hand. This tendency prevents many of them from developing an outside perspective based on previous market entries and even from evaluating opportunities in the light of common predictors of success. Furthermore, when an analysis is conducted, cognitive biases often lead executives to believe that a company's skills are more relevant than they really are, that the potential market is bigger than it actually is, or that rivals won't respond to the entry move.

The costs of miscalculation can be large. The efforts of Anheuser-Busch to diversify into the snack food business, for example, went awry when the beer giant underestimated Frito-Lay's response to a threat to its Doritos franchise. Similarly, EMI failed to capitalize successfully on an exciting medical innovation—the CAT scanner—because the company overestimated its ability to compete in this new market and underestimated the strengths of experienced competitors such as General Electric and Siemens.

Fortunately, some practical steps can help executives control cognitive biases in market entry decisions. Objective predictors of success, for example, can be used to create a reference class: a group of similar decisions that other companies have made in the past. 2 2. For a description of how reference classes can inform decisions extending beyond market entry, see Dan Lovallo and Daniel Kahneman, “Delusions of success: How optimism undermines executives' decisions,” Harvard Business Review , July 2003, Volume 81, Number 7, pp. 57–63. The reference class yields comparative data that are an invaluable reality check on the inside-view analysis. (Government bodies in the United Kingdom have used reference class forecasting to predict the cost of infrastructure projects, and the American Planning Association, a society of professionals focused on public-works projects, has endorsed the use of reference classes.) Additional tools, which can improve the quality of the inside view itself, include competitive-gaming exercises, the study of industry life cycles, and a policy of involving managers from diverse parts of the organization in important decisions. In our experience, the combination of a robust outside view and an improved inside one—better assessments of value propositions, capabilities, market size, competitors, market share and revenue, and costs—dramatically raises the odds of making good entry decisions.

Step outside

Companies have no reason to repeat the mistakes of others. Yet they frequently fail to learn from history, because a myopic focus on the market entry decision at hand prevents them from creating a reference class of at least five (and preferably more) similar entry decisions in the past. Such a reference class promotes systematic learning from the successes and failures of other companies. It also counteracts the tendency of many decision makers to fall into the “confirmation trap” : seeking information that confirms their hypotheses. A broad reference class, in other words, forces analysts to consider more possibilities and new data.

The failure rate of projects is high in industries such as pharmaceuticals, oil and gas, and motion pictures. Companies in these sectors do understand how important it is to play the probabilities and can draw on a rich body of cases in creating a reference class. But companies that place product bets less frequently, and with less apparent risk, have fewer internal reference cases to compare and generally either don't consider looking at the experience of outside companies and industries or, if they do, often conclude that the effort isn't worth the expense. Since the tens (if not hundreds) of millions of dollars at stake in a typical big-company market entry far outweigh the costs of forming a reference class, that conclusion is penny wise and pound foolish.

Companies developing an outside view can benefit from a wide body of statistical research showing that six factors are particularly important predictors of successful market entry (Exhibit 1). Even before companies select their reference cases, an explicit review of these factors sometimes shows that the dice are loaded against going forward.

In constructing a reference class, the first step is to review which of these factors are most relevant. Say a small, technologically adroit company that lacks complementary assets enters a new industry at the same time as large, diversified companies that do have them enter it. In this case, the small company should create a reference class of similar entrants in other industries, not this one. Next, companies should look for reference cases involving as many of the most important factors as possible (Exhibit 2). It's important to uncover both successful and, even more, failed entries so that the reference class approximates the distribution of actual outcomes. The greater the overlap with the experience of the industry in question, the more valuable each example will be for the reference class. But it is also useful—and sometimes, if the industry is a new or emerging one, necessary—to reach out across different industries.

The use of a reference class guards against a weak and dangerous alternative: hypotheses based on an analysis of just one or two cases, whose selection is subject to the “availability bias”: choosing whatever comes to mind most readily. During the buildup to the current conflict in Iraq, for example, the two analogies consistently reported in the press were the Vietnam War and the 1991 Gulf War. These were natural choices, since they were the two most recent large-scale conflicts involving the United States, but they weren't necessarily the most similar ones. Expanding the reference class to include the troubles in Northern Ireland, Britain's involvement in the Middle East after World War I, and US policy in Europe after World War II might have raised fresh, relevant questions about troop requirements, the policing of occupied populations, and postwar reconstruction.

Improve the inside view

Besides developing a reference class, companies should remove any bias from their analysis of the entry decision. Start by targeting five core issues: the value proposition and capabilities, the market's size, the competition, market share and revenue, and costs (Exhibit 3). Of course, other analyses (of regulatory issues, for example) are occasionally necessary and sometimes of paramount importance.

What value proposition and skills are necessary?

The closer a company stays to its core capabilities and value proposition, the greater its chances of mounting a successful entry. 3 3. Companies should measure the distance in “degrees.” Selling the same product through the same distribution channel to the same customer groups, but in a new geography, represents one degree of difference. Selling to different customer groups as well adds a second degree. But companies can be egocentric: they may assume, for example, that since their employees are excited about a product customers will feel the same way, that the resources and assets they already have are the ones needed to meet the needs of the target market, that what they do well is sufficient for success in it, or that they can easily acquire any missing skills. All of these biases undermine the analysis.

A memorable example of a company that underestimated the difficulty of developing new skills dates back to the 1970s, when the music producer EMI entered the CAT scanner business on the back of an innovation developed primarily by Godfrey N. Hounsfield, a researcher in the company's labs. EMI had no experience in the manufacture of medical-diagnostic-imaging equipment or in medical sales and distribution. Its senior management decided to build these capabilities rather than partner with other companies to obtain them. More than five years passed before EMI delivered the first product. Soon thereafter, General Electric, with its world-class manufacturing and sales and distribution networks (and 75 years of experience with X-ray equipment), entered the US market. So did Siemens, which had already entered the European one. Not surprisingly, GE and Siemens became dominant and EMI exited after sustaining substantial losses. (Hounsfield, however, won a Nobel Prize in 1979.)

To avoid such mistakes, companies should use the reference class to identify the key determinants of successful entries into similar markets. Which product attributes and business models have succeeded in the past? Were the winners superior marketers? Did they have outstanding distribution systems? If new capabilities seem to be needed for success, companies should exercise caution and consider contractual approaches, such as joint ventures and licensing, that can help them secure the missing assets. It's frequently valuable to have people who are not directly involved in making the decision help determine what's needed for a successful entry. After all, the analysis of managers from different divisions will be less biased by ingrained knowledge of the organization's current value proposition and skills.

How big is the market?

Estimating a market's potential size typically involves categorizing customers into a number of segments and then using pricing and elasticity assumptions to estimate the percentage of buyers in each category the company might capture. Two biases typically distort such estimates. One is the fact that human beings, when considering potentially positive outcomes, are almost always optimistic. The second is “anchoring and adjustment”: the failure to adjust estimates sufficiently from an initial value, regardless of its origin. An optimistic anchor that often infects market estimates is an industry's current growth rate, which rarely endures for long. Another anchor is the initial “gut” forecast number an analyst plugs into a spreadsheet with the intention of making adjustments as more information arrives.

How influential are such anchors? In one recent study, experienced real-estate brokers, who had contended that the listing price 4 4. The price a person selling a house asks for it publicly. of a house wouldn't affect their evaluation of its “true” value, were asked to assess a property. Each broker received a ten-page booklet on the house and on the prices and characteristics of houses in the area. Each then visited it, plus others in the neighborhood. The agents didn't know that the listing prices they had been given for the house in question were all different and had been randomly manipulated within a range of plus or minus 11 percent of the actual listing price. Those spurious listing prices significantly affected the evaluations of the agents. Yet even when they were told about the results, they maintained that the listing-price anchor had had no effect on them.

To avoid anchoring estimates on a target market's current growth rate, companies should always try to determine the life cycle stage of the business they wish to enter. At some point, most industries experience shakeouts, which can be particularly severe in fast-growing sectors. Although it is difficult to predict the exact timing, efforts to think through the possibility of a shakeout—and how many companies are likely to survive it—often highlight the unsustainability of current growth rates.

A second useful way of improving estimates of market size is to use the reference class of other entrants as a benchmark. Consider the fate of the Segway, a new type of two-wheeled vehicle unveiled in December 2001. Although we don't know for sure what the inventor, Dean Kamen, did to estimate the size of the market, we do know how many Segways he thought could be sold after a year: 10,000 a week. A typical approach for arriving at such a figure would have involved combining an analysis of the number of consumers who could both afford the Segway and realistically use it for commuting or recreation, on the one hand, with penetration rates in this demographic for similar products, such as scooters and bicycles, on the other.

But the Segway's usefulness depended on changes to infrastructure. How many cities would allow people to drive the vehicle on sidewalks? If roads were the only alternative, how many potential purchasers would still be willing to use it? Since the answer to both questions was “not many,” just 6,000 Segways were sold in the first 21 months. A broader reference class that included conventional automobiles, fuel cell cars, hydrogen cars, and infrastructure-dependent technologies such as high-definition television and telephones might have shown that securing the right to ride the Segway in cities was of paramount importance. After all, it took years to create the roads, power grids, standards, and networks necessary for cars, electric lighting, HDTV, and telephone service to become ubiquitous.

Who are the potential competitors?

Other market entries fail because companies underestimate the competition. Many decision makers, for example, don't grasp the likelihood that their rivals may enter the same market they have targeted; they suffer from competitive blind spots when thinking about what could go wrong. That's what happened to British Satellite Broadcasting (BSB) after it outbid Rupert Murdoch's Sky Television, in 1988, to win the contract to broadcast on a new British satellite. Even as BSB prepared to launch its service, Murdoch obtained the rights to broadcast from a Spanish satellite that could reach Great Britain. Sky went on the air in early 1989, beating BSB to the market by 13 months. Despite Murdoch's 1988 bid, Richard Brooke, BSB's treasurer, said that “Murdoch’s announcement came from left field and took everybody by surprise.”

While it is difficult to generate a reference class for potential entrants, in our experience it can be very helpful to brainstorm about them and then to test these hypotheses in a disciplined way. The first companies to consider are those in the same industry; after all, if one of them is contemplating plunging into a market, its competitors probably are too. If companies in other industries could succeed in the target market, they should be considered as well. Hindsight will always reveal the “necessary” capabilities, but expanding the list of possible competitors increases the odds of spotting unexpected threats. Although discretion is sometimes the better part of valor, this analysis is meant to help companies react to the competition's moves before they happen, not to scare entrants away from a fight.

The benefits of recognizing and countering potential entrants can be large. Consider the case of Softsoap, the first liquid-soap manufacturer. The shift from hard to liquid soap was an incremental innovation that couldn't be protected by a patent; there are too many ways to make the product. The businessman who had the idea for Softsoap, Robert Taylor, knew that if it entered the industry without protection, consumer-marketing giants like Dial would crush it. His solution: signing contracts to obtain all of the existing capacity for the pumps capable of dispensing Softsoap. The result was an 18-month lead on the competition. Today, Softsoap is synonymous with the product category in the same way Coke is with cola drinks.

What market share and revenue can be achieved?

In addition to overlooking potential competitors, companies often fail to factor in the likely responses of current ones. We call this the “brick wall effect”: assuming that competitors won't adjust their prices, broaden their product offerings, or otherwise change strategy in response to the entry. (The focus on current competitors rather than potential new ones distinguishes the brick wall effect from the competitive blind spots described previously.)

Consider the experience of Anheuser-Busch after it diversified into snack foods, in 1979. Its Eagle Brand operation initially succeeded by staying small and focusing on supplying airlines and taverns. Once Anheuser-Busch expanded beyond these markets, however, it was encroaching on Frito-Lay's turf, stimulating a harsh counterattack: deep across-the-board price cuts by Frito-Lay and a concerted effort to drive Eagle out of supermarkets. These aggressive moves ultimately forced Anheuser-Busch to sell Eagle to P&G.

The best way to anticipate competitive responses is to conduct gaming exercises, with executives role-playing competitors to gain insight into their likely behavior. One telecommunications company that leaned toward using a premium-feature, low-cost strategy to enter a new market assumed that the incumbents would maintain the status quo of premium features and high prices. But after using game theory, simulations, and competitive analysis to assess the incumbents' likely responses, the prospective entrant realized that it had overestimated its returns by a hefty 800 percent. It modified its entry strategy and performance expectations accordingly. 5 5. Hugh Courtney, 20/20 Foresight: Crafting Strategy in an Uncertain World , Boston: Harvard Business School Press, 2001, pp. 167–71.

Using the reference class to set reasonable bounds on market share estimates also helps. If the reference class attained only a 3 to 5 percent market share, decision makers should pause when they see higher estimates.

How much will it cost?

Good cost estimates can make the difference between creating value and destroying it, but many companies can't arrive at them, because of the “planning fallacy”: the tendency to underestimate the duration and cost of any endeavor. Most of us recognize this problem in our own lives, and research shows that we should. One study assessed the accuracy of the estimates that psychology students made of the time they would need to complete their honors theses. Even though the question was asked toward the end of the year, 70 percent of the students took longer than they had predicted—on average, 7 days longer than their worst-case forecast (48 days) and 22 days longer than their “realistic” one (33 days). Studies of holiday shopping, tax filings, and other routine chores yield similar results.

Large corporations are also susceptible to the planning fallacy. Even in fairly routine endeavors (such as launching new consumer products), expenditures often exceed forecasts dramatically. In more novel initiatives, the effects of the planning fallacy are often severe. A Rand Corporation study of 44 chemical-processing plants owned by Fortune 500 companies, for example, found that the actual construction costs of these facilities, on average, were more than double the initial estimates. One year after start-up, about half of the plants produced less than 75 percent of their design capacity; a quarter produced less than 50 percent.

If sufficiently broad, a reference class is a potent tool to counteract the planning fallacy. For a new type of polymer-processing plant, say, the reference class should include not only plants built by the company contemplating it but also cutting-edge processing plants in the chemical industry and perhaps new types of processing plants in other industries. A broad reference class gives would-be entrants a realistic range of costs associated with attaining various market share levels. Cost estimates far below the realized costs of the reference class should make decision makers think again.

Paraphrasing Thomas Hobbes, the renowned late economist Paul Geroski, of the London Business School, once said, “The life of a typical entrant is nasty, brutish, and short.” He was right. Fortunately, companies can boost their odds of success by tackling cognitive biases head on.

John Horn is a consultant in McKinsey's Washington, DC, office; Dan Lovallo is a professor at the Australian Graduate School of Management (of the University of New South Wales and the University of Sydney) as well as an adviser to the firm; Patrick Viguerie is a director in the Atlanta office.

Explore a career with us

Related articles.

The case for behavioral strategy

Behavioral science in business: Nudging, debiasing, and managing the irrational mind

Step-by-Step Guide to Creating an Effective Market Entry Strategy

​Entering a new market can be an exciting opportunity for your business. It means reaching new customers, increasing your sales, and growing your brand. However, stepping into a new market is not something you can do without preparation. You need a clear, well-thought-out plan to make sure your efforts are successful. A market entry strategy is a plan that helps you introduce your products or services to a new market. This strategy covers everything from understanding the market and its customers to choosing the best way to enter and grow in that market. With a good strategy, you can avoid common pitfalls and make the most of the opportunities available.

This guide is designed to help you create an effective market entry strategy. It breaks down the process into simple, easy-to-follow steps. Whether you’re a small business looking to expand locally or a larger company aiming to go global, these steps will provide a clear path to success.

What is a Market Entry Strategy?

A market entry strategy is a plan businesses use to start selling their products or services in a new market. It helps you understand the new market, including customer needs, competitors, and potential challenges. This planning ensures that your business can effectively reach and attract new customers.

The strategy outlines the best way to enter the market, whether it’s through exporting, partnering with local firms, or opening a new branch. By carefully planning and making informed decisions, you increase your chances of success and avoid common pitfalls.

• Ready to use
• Fully customizable template
• Get Started in seconds

Key Components of a Solid Market Entry Strategy

Creating a successful market entry strategy requires careful planning and consideration of several important elements. Here are the key components that make up a solid market entry strategy:

• Market research - Conduct thorough research to understand customer needs, market size, growth potential, and trends. Analyze the competition and potential entry barriers.
• Clear objectives - Define clear business goals, such as increasing sales or expanding market share, to guide your strategy and measure success.
• Target audience - Analyze your target audience ’s demographics, buying habits, and pain points to tailor your products or services to their needs.
• Competitive analysis - Analyze competitors to identify their strengths and weaknesses. Use this information to differentiate your offerings and position your brand effectively.
• Entry strategy selection - Choose the best market entry strategy, like exporting or joint ventures, based on your research, goals, and available resources.
• Financial plan - Develop a budget that includes marketing, distribution, and staffing costs, ensuring it aligns with your objectives and risk tolerance.
• Marketing and sales strategy - Create a marketing and sales plan that includes brand positioning , pricing, and promotion to effectively reach and resonate with your target audience.
• Risk management - Identify potential risks like political or cultural challenges and develop strategies to mitigate them while staying flexible to adapt your plans.
• Performance metrics - Set KPIs to track success, such as sales growth or market share, and regularly monitor progress to adjust your strategy as needed.

Why are Market Entry Strategies Important

Market entry strategies are important because they help your business successfully start selling in a new market. Here’s why you need to invest in market entry strategies.

Better preparation

A market entry strategy helps you understand the new market in detail. This includes learning about local customer preferences, cultural differences, and what the market needs. With this knowledge, you can tailor your products or services to better meet local demands.

Informed decisions

The strategy helps you decide the best way to enter the new market. Whether it’s exporting products, partnering with local businesses, or opening a new branch, having a plan ensures you choose the method that fits your goals and market conditions.

Avoid mistakes

By planning ahead, you can identify potential challenges before they arise. This helps you avoid costly mistakes, like failing to comply with local regulations or misunderstanding customer needs. A good strategy helps you address these issues in advance.

Increased success

A well-thought-out strategy improves your chances of success in the new market. It helps you use your resources wisely, execute your plans effectively, and achieve your business goals, leading to better growth and profitability.

How to Create a Market Entry Strategy

Expanding into a new market can boost your business, but it requires a solid plan. A market entry strategy helps you navigate this process by outlining how to introduce your products or services effectively. Here’s how to create a successful market entry strategy in 7 steps.

1. Research the market

Start by learning about the new market. Find out who your potential customers are, what they need, and how big the market is. Look at your competitors and see what they are doing. This will help you understand if the market is a good fit for your business.

2. Define your goals

Decide what you want to achieve in the new market. Are you looking to increase sales, build brand awareness, or expand your customer base? Clear goals will guide your strategy and help you measure your success.

3. Choose your entry method

Decide how you will enter the market. Options include exporting your products, forming partnerships with local companies, franchising, or setting up a new branch. Each method has its pros and cons, so choose the one that best suits your goals and resources.

4. Develop a marketing plan

Create an action plan for how you will promote your products or services in the new market. This includes setting prices, deciding on advertising methods, and choosing how to distribute your products. Your plan should be tailored to the preferences and needs of the local customers.

5. Understand legal requirements

Learn about the local laws and regulations that affect your business. This includes rules on taxes, business registration, and product standards. Make sure you follow all legal requirements to avoid issues.

6. Build local connections

Find local partners, suppliers, or employees who can help you navigate the new market. Building relationships with local businesses and individuals can make it easier to enter and succeed in the market.

7. Monitor and adjust

Once you enter the market, keep track of how things are going. Measure your success against your goals and gather feedback from customers. Be ready to adjust your strategy if needed to improve your results.

15 Types of Market Entry Strategies

Choosing the right market entry strategy is essential for successful expansion. Each strategy offers different levels of risk, control, and investment. By understanding these options, you can select the one that best fits your business goals and resources. Here are 15 common market entry strategies to consider.

1. Exporting

Exporting means selling your products or services from your home country to customers in a new market. This is often the easiest and least expensive way to test a new market since you don’t need to set up local operations. You just ship your products and handle sales from afar.

2. Licensing

Licensing allows a local company to use your brand name, technology, or product design in exchange for a fee or royalties. This means you can enter the new market with less risk and investment because you don’t need to set up your own operations. The local company handles production and distribution.

3. Franchising

Franchising involves letting a local business use your brand and business model. The franchisee pays you fees and follows your system to operate their business. This helps you expand quickly because the franchisee brings local knowledge and manages day-to-day operations.

4. Joint ventures

A joint venture is a partnership with a local company to create a new, shared business. Both companies contribute resources, share risks, and split profits. This method combines the strengths of both partners and helps navigate local market conditions together.

5. Wholly owned subsidiaries

A wholly owned subsidiary is a company you fully own and control in the new market. You can set it up from scratch or buy an existing local company. This gives you full control over operations and business decisions, but it requires a significant investment and carries higher risks.

6. Strategic alliances

Strategic alliances are partnerships with local companies to work on specific projects or goals. Unlike joint ventures, these alliances are often less formal and can be focused on short-term objectives like joint marketing efforts or shared technology.

7. Piggybacking

Piggybacking means using the existing distribution network of a local company to sell your products. This allows you to enter the market quickly and cost-effectively by leveraging the local company’s established relationships and infrastructure.

8. Direct investment

Direct investment involves putting money into building new facilities, offices, or stores in the new market. This method gives you full control over your operations and business practices, but it requires a large financial investment and involves higher risks.

9. E-commerce

E-commerce is selling your products online to customers in the new market. This approach allows you to reach a wide audience without needing a physical presence in the market. It’s a cost-effective way to test demand and build a customer base.

10. Contract manufacturing

Contract manufacturing means outsourcing the production of your products to a local manufacturer. This way, you can enter the market without investing in your own production facilities. The local manufacturer produces the goods according to your specifications.

11. Turnkey projects

Turnkey projects involve setting up a complete business operation in the new market and then handing it over to a local company. This means you handle everything from construction to set up and then transfer the fully operational business to the local partner.

12. Management contracts

Management contracts allow you to provide management expertise to a local company in exchange for fees. You oversee operations and help run the business, but the local company owns it. This method gives you operational control with less financial risk.

13. Acquisitions

Acquisitions involve buying an existing company in the new market. This gives you immediate access to the market, including its customer base, facilities, and staff. It’s a quick way to enter the market but requires significant investment and careful integration.

14. Greenfield investments

Greenfield investments mean building new facilities or operations from scratch in the new market. This approach offers complete control over the setup and operations but requires a substantial financial investment and a long time to become operational.

15. Cooperative agreements

Cooperative agreements involve working with local firms for specific activities like marketing or distribution. These agreements allow you to benefit from local expertise and networks without forming a formal joint venture or partnership. They can be flexible and focused on particular needs.

Domestic vs International Market Entry

Expanding your business can mean entering either domestic or international markets, each with its own opportunities and challenges. Here’s a simple breakdown of the differences:

Domestic market entry

• Familiarity : Expanding within your home country means you already understand the culture, language, and customer preferences. This familiarity makes it easier to tailor your products or services to local needs.
• Regulations : You are already aware of local laws and regulations, which simplifies the process of compliance.
• Logistics : Managing logistics, such as shipping and distribution, is usually simpler and less costly within your own country.
• Competition : You may face more direct competition from established local businesses but can leverage your existing brand recognition.

International market entry

• New opportunities : Expanding internationally opens up new customer bases and growth opportunities. You can reach markets with different demands and less competition for your products.
• Cultural differences : Understanding and adapting to different cultures, languages, and preferences is crucial for success.
• Regulations and compliance : Navigating foreign laws, trade regulations, and tariffs can be complex and may require expert assistance.
• Logistics and costs : International expansion often involves higher logistics costs, including shipping and potential import duties. It may also require setting up local operations or partnerships.

Choosing between domestic and international market entry depends on your business goals, resources, and risk tolerance. Domestic expansion is often simpler and less risky, while international expansion offers the potential for significant growth but comes with added complexity. Understanding these differences can help you make an informed decision on how best to expand your business.

How to Select the Correct Market Entry Strategy

Choosing the right market entry method depends on your company’s objectives, available resources, and the target market environment. Here are some steps to guide your decision:

1. Understand your goals

Clearly define what you want to achieve in the new market. Are you looking to increase sales, build brand awareness, or gain market share? Knowing your objectives will help you choose the most suitable strategy.

2. Analyze the market

Research the new market thoroughly. Understand customer preferences, cultural differences, and demand for your products or services. Identify potential competitors and analyze their strengths and weaknesses.

3. Assess your resources

Evaluate your financial and operational resources. Determine how much investment you can afford and whether you have the necessary expertise to enter the new market. This will help you decide if a low-cost strategy like exporting is better or if you can invest in a wholly owned subsidiary.

4. Evaluate risk

Consider the risks associated with each market entry strategy. Strategies like franchising and licensing involve less risk, while direct investment and acquisitions carry higher risks but offer more control.

5. Consider control

Decide how much control you want over your operations in the new market. Licensing and franchising give you less control, while joint ventures and wholly owned subsidiaries offer more.

6. Choose your entry strategy

Based on your goals, market research, resources, risk tolerance, and desired level of control, choose the market entry strategy that best fits your needs. For example, if you want full control and have the resources, a wholly owned subsidiary might be ideal. If you want to minimize risk, exporting or licensing might be better.

7. Plan your execution

Once you have selected your strategy, create a detailed plan for execution. Outline the steps needed to enter the market, including timelines, budgets, and resources required. Be prepared to adapt your plan based on market feedback and performance.

Setting up Your Market Entry Strategy with Creately

Using a visual collaboration platform like Creately can greatly improve the process of creating a market entry strategy. Here’s how you can leverage its features to streamline your planning and execution:

Brainstorming and idea generation

• Infinite canvas: Use the infinite canvas to brainstorm ideas with your team. You can visually map out different market entry strategies, options, and ideas without running out of space.
• Mind maps: Create mind maps to explore different aspects of market entry, such as potential target markets, customer segments, and marketing tactics. This helps in organizing thoughts and identifying connections.

Research and analysis

• Flowcharts and diagrams: Use flowcharts and diagrams to break down complex processes like market analysis or competitive analysis. Visualizing these processes can help clarify steps and identify gaps in information.
• Tables and charts: Create tables and charts to compare competitors, analyze market trends, and track key metrics. This makes it easier to see data at a glance and draw insights.

Strategy development

• Templates: Use pre-designed templates for SWOT analysis, PEST analysis, or Porter’s Five Forces to evaluate the market environment and develop strategic plans.
• Org charts: Create organizational charts to plan team structures and allocate resources for market entry. This can help in visualizing the roles and responsibilities required for the new market.

Planning and execution

• Gantt charts: Create Gantt charts to develop timelines for your market entry strategy. You can map out each phase of your plan, assign tasks, and track progress in real-time.
• Task management: Use built-in task management features to assign tasks to team members, set deadlines, and track the completion of key activities related to market entry.

Collaboration and feedback

• Real-time collaboration: Collaborate with team members in real-time, allowing everyone to contribute ideas and feedback directly on the canvas. This promotes active participation and collective decision-making.
• Comments and annotations: Add comments and annotations to specific parts of your diagrams or plans to provide feedback, ask questions, or suggest changes.

Presentation and sharing

• Export and share: Export your diagrams and plans in various formats to share with stakeholders or present to decision-makers. You can also share links to the Creately workspace for direct access.
• Presentation mode: Use presentation mode to walk through your strategy with stakeholders, making it easier to explain your approach and get buy-in.

Creating a market entry strategy is an essential step for any business looking to expand into new markets. By carefully researching the market, setting clear objectives, and choosing the right entry strategy, you can increase your chances of success. Using a visual collaboration platform like Creately can help streamline this process, allowing you to brainstorm ideas, analyze data, and collaborate with your team more effectively. With thoughtful planning and execution, your market entry strategy can pave the way for growth and new opportunities for your business.

Join over thousands of organizations that use Creately to brainstorm, plan, analyze, and execute their projects successfully.

FAQs Related to Market Entry Strategy

What factors should i consider when entering a new market, how does market research play a role in market entry strategy, can a company use multiple market entry strategies at once, what are the risks associated with entering a new market, how long does it take to implement a market entry strategy, more related articles.

Amanda Athuraliya is the communication specialist/content writer at Creately, online diagramming and collaboration tool. She is an avid reader, a budding writer and a passionate researcher who loves to write about all kinds of topics.

• Make Money Online
• Privacy Policy
• Terms and Conditions

Market Entry Strategy: Key Insights, Best Practices, and Case Studies

In an increasingly globalized world, the need for businesses to expand beyond their domestic markets is more important than ever. A well-crafted market entry strategy is crucial to successfully penetrate foreign markets. This article explores various market entry strategies, their potential benefits, and considerations, supported by relevant examples and case studies.

What is a Market Entry Strategy?

A market entry strategy outlines the method by which a company intends to sell products or services in a new market. It encompasses factors like product adaptation, pricing strategies, distribution channels, promotional tactics, and much more. The right strategy depends on various factors like the nature of the market, competition, legal and regulatory environment, and the company’s resources and capabilities.

Key Types of Market Entry Strategies

Several strategies can be employed depending on the specific context and business objectives. Here are some common ones:

• Exporting:  This involves selling products made in one country to customers in another. This is often the first strategy used by companies looking to enter foreign markets.
• Franchising:  This involves licensing the right to use a company’s business model and brand to a local operator.
• Joint Ventures:  This involves partnering with a local company to share resources and capabilities. This strategy is often used when the local partner has significant market knowledge or resources.
• Foreign Direct Investment:  This involves setting up operations or acquiring businesses in the foreign market. This strategy typically requires significant resources and commitment.

Choosing the Right Market Entry Strategy: Key Considerations

Selecting the appropriate market entry strategy requires careful consideration of several factors:

• Market Research:  Comprehensive understanding of the foreign market is vital, including consumer behavior, competition, and regulatory environment.
• Company Resources:  The company’s resources and capabilities must align with the strategy. For example, FDI requires considerable financial resources.
• Risk Tolerance:  Each strategy comes with its own set of risks. Companies must consider their risk tolerance when choosing a strategy.

Case Study: Starbucks’ Market Entry into China

Starbucks provides an excellent example of a successful market entry strategy. When entering China, Starbucks recognized that its standard model wouldn’t work in a country where tea, not coffee, was the traditional drink. Starbucks adapted its product offering to include local teas and food items, and positioned its stores as a place for social gatherings. This adaptation of product and positioning, combined with a joint venture strategy to leverage local knowledge, led to Starbucks’ success in the Chinese market.

Summary: The Power of a Well-Planned Market Entry Strategy

A sound market entry strategy is a cornerstone of successful international business expansion. By understanding different strategies and the considerations involved in choosing one, businesses can position themselves for success in new markets. The Starbucks case study underscores the importance of market understanding and product adaptation in foreign markets.

RELATED ARTICLES MORE FROM AUTHOR

Where to Watch Chivas vs. America: Liga MX Live Stream Online, TV Channel, Prediction, and Odds

Unlocking Success: The Key Benefits of AI Tools in Business in 2024

The Ultimate Guide to Consolidated Financial Statements in 2024

Leave a reply cancel reply.

Save my name, email, and website in this browser for the next time I comment.

EDITOR PICKS

Developing an effective strategic plan for your business: key steps to success, effective tips for teaching children science: make learning fun and engaging, 6 steps to super sleek stylish hair – get the perfect look today, hairstyle for the round face with confidence.

What are the best places to visit in Italy in 2024?

Easy Chuck Roast Recipe: A Step-by-Step Guide in 2024

Top 10 Places to Visit in USA in May

Popular category.

• Business 61
• LIFESTYLE 58

What is a market entry case?

, ex-Bain, ex-Instacart Published: May 14, 2020 | Last updated: March 28, 2024 Introduction | Case types | Sample framework | Example case Market entry cases ask a candidate to evaluate a specific growth opportunity and decide whether or not the company should pursue it. Introduction to market entry cases (Top) For example, a classic market entry case might read like this: “Retail Co. specializes in outdoor apparel for children. They’ve been very successful in the midwest and are considering launching in Canada due to similar climate and demographics. What factors would you look at to determine if this expansion would be successful?” Just hearing this type of question makes some people nervous - where do you start and how do you evaluate the problem in a structured way? Don’t worry; after reading this post, you’ll be able to recognize a market entry question like this and crack it in no time! Market entry cases are a very common type of case during the interview process. There are two reasons for this. First, they test a variety of skills consultants care deeply about: structured problem solving, logical reasoning and creativity. Second, consulting companies frequently help clients with market entry problems, and case interviews mirror real world consulting work. Since consultants often give candidates cases they’ve worked on with real clients, tso there’s a good chance you’ll get one of these eventually. The good news is, these are fairly straightforward cases. We’ll go through one framework that can be used to solve these types of cases, as well as a more detailed example. As always, don’t forget that every problem is unique, and a great answer will always take into account the nuance of the problem and propose a tailored framework. Types of market entry cases (Top) There are three main buckets of market entry cases: geographical, product line expansion, and generic growth strategy. 1. Geographic expansion cases The question you’re trying to answer in the geographical type is whether a company should expand their current business to a new market. For example, if Chipotle should expand into Europe, or if Uber should launch in China. 2. Product line expansion cases In the product portfolio type of market entry case, the question is if a company should launch a new product into their existing market. For example, if Harley Davidson should launch an electric motorcycle, or if Whole Foods should start selling meal kits in addition to groceries. 3. Generic growth strategy cases Sometimes market entry cases can be hidden in the introduction but appear partway through the case. For example, your interviewer might say something akin to: “Client Co. has seen declining revenue recently. What should they do?” This is a growth strategy case, which could have various paths such as acquire a competitor or invest in internal R&D. One hypothesis may be expanding to a new market to grow their customer base. In this example, the market entry aspect of the case would branch out from a higher-level growth strategy problem. Market entry case framework (Top) Now that you’ve seen what market entry cases look like, let’s talk about how to solve them. There are four steps to these cases: assessing the target market, evaluating the company’s capabilities, quantifying the opportunity, and outlining a go-to-market strategy. Assessing the target market In this step, you’ll want to evaluate the market in question. The main goal here is to determine if the market is large, growing, and what the competitive landscape looks like. In addition, you’ll want to determine if there are any additional factors that might prevent a company from expanding successfully, for example, if there were a war in the country, high levels of corruption or anti-American sentiment. Key questions include: How big is the market and is it growing? Who is the target customer and what are their needs or preferences? What is the competitive landscape? Are there any social, macroeconomic, or geopolitical factors to consider? Evaluating company capabilities Now it’s time to look internally, you’ll want to dive into the client’s business to understand their product offering, their current customers, strengths and weaknesses, and their financial situation. Just because a new market is attractive doesn’t mean a company should always expand there. The company needs to have the right characteristics to successfully enter. For example, expanding into China might look like a good opportunity for a hotel chain, but if they don’t have anyone on their team with experience in China and have never grown internationally before, it will probably be a very tricky strategy to carry out successfully. The key questions you’ll want to answer in this step are: What is the current product and customer mix? What are the strengths and weaknesses of the company? Who are the key suppliers or partners? What is the current financial position? Quantifying the opportunity If you’ve gone through the first two steps and decided the market entry is a good idea for the client, the next step is determining the investment that would be required to enter the market versus the expected revenue potential. In other words, would the juice be worth the squeeze? What share of the market could be captured? What would the primary costs of entry be? What are the outstanding risks? Developing a go-to-market plan The final step for a market entry case is laying out the ‘how’ once you’ve come up with an answer on whether or not to enter. There are several ways a company could enter a new market. Each of these would be evaluated using pros and cons: Acquire a company in the target market Form a partnership with a company e.g. sell through a local distributor rather than direct to consumers Grow organically into the new market, either with an existing brand or through a new brand 💡 Shameless plug: Our consulting interview prep can help build your skills Example market entry case (Top) Let’s try going through a market entry case using the framework above. The question we’ve been given is: “Taco Bell recently expanded into the UK with great success, should they launch in France as well?” We’ll walk through each question below and demonstrate the kind of thought process the candidate should be going through (and voicing over to the interviewer) if they were in a real case interview. Remember, this isn’t how an actual conversation would go, but it does provide an example of how this framework could be applied to a real question, and the types of issues you should be thinking about. Step 1: Assess the market We’ll begin by assessing the attractiveness of the French market. Let’s go through our key questions: How big is the market and is it growing? Here, we’d want to know how big the fast food market is in France and what the growth rate is. Let’s say our interviewer tells us it’s a $50B market and has been growing at 12% for the past 3 years. Right away, we see that this is a large and rapidly growing market, which means this is an attractive place to be at a high level. Who is the target customer and what are their needs or preferences? Based on what we know about Taco Bell domestically, we can build a profile of the target customer: someone who goes to other fast food restaurants, is looking for a quick and cheap meal, enjoys Mexican food, and isn’t very health conscious. The biggest question is if this type of consumer is as prevalent in France as they are in the US. We might receive additional information from our interviewer that the French don’t prefer spicy food and aren’t as familiar with Mexican cuisine. What is the competitive landscape? Competitors to Taco Bell would include any other businesses that meet the same customer needs mentioned above. For example, other fast food restaurants or other Mexican restaurant chains that are popular in France. In this case, we’re told there are no direct competitors (no Mexican fast food restaurants) but McDonalds, Subway, and Pizza Hut have ~25% of the fast food market. Are there any social, macroeconomic, or geopolitical factors to consider? Here we could bring in any current events that might impact our strategy. For example, we might know that the minimum wage in France is much higher than the US. This higher cost of labor could cut into Taco Bell’s profits if they weren’t able to raise prices to offset it. Overall, after a quick evaluation of the market, it appears to be an attractive region for a fast food restaurant, but there’s an open question on the customer preferences piece and whether French people will embrace Mexican food. Step 2: evaluating company capabilities The next step is looking at Taco Bell’s current performance and determining if they would be successful expanding into France: What is the current product and customer mix? Taco Bell serves lunch and dinner with a broad menu of American Mexicanized food. Historically, their largest customer segment is 18-25 year old men, although menu additions such as salad bowls have aided in their effort to attract 25-35 year olds as well as women. Domestically, the bulk of their business comes from drive-thru orders, however, in the UK their urban locations attracted a broader demographic, including teens and families. What are the strengths and weaknesses of the company? Taco Bell is a well known brand that’s recognized globally. They’ve recently proved an ability to successfully co-brand menu items (for example their domestic partnership with Doritos) which could be employed abroad with popular brands in the target country. In addition, their success in the UK has shown they have the skills and experience needed to launch in a new market. What is the current financial position? Taco Bell’s revenue is ~$11B and has been growing in the double digits recently. We would also want to look at same store sales to determine if revenue was growing solely due to expansion or if existing locations were also seeing an increase in business. From this quick look, we see that Taco Bell is in a solid place financially and has a dominant position in the market. They’re experienced with new market entry as well. Step 3: quantifying the opportunity Now we want to determine if expanding into France will be financially attractive for Taco Bell. What share of the market could be captured? Of the $50B fast food market, how much do we think Taco Bell can capture? At this stage, we would likely be given some additional information, such as the market share of the largest competitors. We find out McDonalds has a 10% market share and they’ve had to transform their product in order to be successful - focusing on a Cafe area and larger seating spaces. In this case, we might assume Taco Bell could eventually capture just 1% of the French fast food market, or $500M, as the cuisine isn’t nearly as popular What would the main costs of entry be? The primary costs would include real estate, building the team, and doing market research to develop a menu tailored to local tastes. Marketing would also be a large cost to educate the French market about their brand and product. What are the outstanding risks? The biggest risk for Taco Bell is there’s no product-market fit e.g. the French consumer doesn’t eat Mexican food. One way to mitigate this is to start with a very small footprint, just a couple locations, and put them in a densely populated area with a more diverse population. Step 4: Developing a go-to-market plan Finally, we would want to recommend a strategy for Taco Bell to enter France. In this case, growing organically makes the most sense as the brand is the major strength. Starting with a couple locations in Paris where there is lots of foot traffic and both locals and tourists makes sense. Additional market research would need to be done to determine which menu items should remain and what should be added to localize the flavor profiles. You’re bound to get a market entry case during the interview process, so it’s a good idea to get familiar with this framework and the types of questions you’ll be looking to answer. Your interviewer will guide you through the process a bit in terms of the additional information they start to share, so you’ll see where to push more or less. Remember, these are real problems clients are looking for advice on, so it’s great practice in that regard as well! Read this next: Full cases from RocketBlocks 29 full cases from consulting firms Profitability case interviews M&A case interviews Weird and unusual case interviews Pricing case interviews Market sizing case interviews PE due diligence interviews Supply chain case interviews Digital transformation consulting cases See all RocketBlocks posts . Get interview insights in your inbox: New mock interviews, mini-lessons, and career tactics. 1x per week. Written by the Experts of RocketBlocks. P.S. Are you preparing for consulting interviews? Real interview drills. Sample answers from ex-McKinsey, BCG and Bain consultants. Plus technique overviews and premium 1-on-1 Expert coaching. Launch your career. For schools Expert program Testimonials Free resources Behavioral guide Consulting guide Product management guide Product marketing guide Strategy & BizOps guide Consulting case book Interview prep Product management Product marketing Strategy & Biz Ops Resume advice Part I: Master resume Part II: Customization Focus: PM resumes Focus: Consulting resumes Focus: BizOps resumes Developing a Market Entry Strategy for Your Business: A Comprehensive Guide 1.0 introduction. The global marketplace is more accessible than ever before. With technology breaking down geographical barriers, businesses of all sizes can look beyond their local surroundings and consider the wider opportunities that international markets present. But diving into a new market isn’t as simple as setting up shop and hoping for the best. Careful planning, deep understanding of the target market, and strategic execution are all key to successfully penetrate a new market. This comprehensive guide is designed to help businesses at any stage of growth develop a robust market entry strategy. We will explore various market entry methods, the importance of identifying and understanding your target market, and the process of creating a strategic plan for successful entry. Real-world examples will be provided in the form of case studies to demonstrate the application of these strategies in practice. Whether you’re launching a start-up or looking to expand an established business, the insights shared in this guide will provide a valuable roadmap. From choosing the right entry strategy to adapting it for optimal results, you’ll gain the knowledge you need to confidently and effectively enter new markets. Prepare to embark on an exciting journey of growth and expansion for your business. 2.0 Understanding Market Entry Strategies Market entry strategies are essential tactics that a business can leverage when it intends to introduce its products or services into a new market. They form the bedrock for successful penetration into new territories, enabling companies to navigate unfamiliar landscapes while mitigating risks and taking advantage of potential opportunities. There is no one-size-fits-all approach; the right strategy for your business will depend on various factors, including your product or service, target market, industry competition, and internal resources. Let’s delve into some of the most common market entry strategies: Exporting: This is a relatively low-risk strategy that involves selling your product directly to consumers in the foreign market or through a distributor. The latter approach can often help overcome logistical and regulatory challenges associated with exporting. Licensing or Franchising: Here, a company in the target market is given the rights to use your business model, brand, technology, or product. In return, you receive licensing or franchising fees. This approach reduces risk and investment but also limits your control over the brand in the foreign market. Partnerships or Joint Ventures: This strategy involves teaming up with a company in the target market. The partnership can help reduce risk, increase local market knowledge, and enhance distribution networks. However, it does involve sharing profits and decision-making. Foreign Direct Investment (FDI): This strategy involves a significant commitment of resources as it may include setting up manufacturing facilities or fully-owned subsidiaries in the target market. While this strategy provides maximum control and potential revenue, it also comes with higher risk and investment. E-commerce: For many businesses, especially those in the service sector or selling digital products, launching their offering in new markets via online platforms is a cost-effective and flexible strategy. It allows you to reach a global audience with minimal investment. Piggybacking: A less common but potentially effective strategy involves a domestic company “carrying” your product into the target market. This can be a win-win as the domestic company can diversify its offerings, and your company can enter a new market with reduced risk and investment. Each of these strategies comes with its own set of advantages, disadvantages, and requirements. Therefore, understanding these strategies is only the first step. You need to analyse them in the context of your business and the specific market you’re targeting to determine the most suitable approach. This analysis will form a vital part of your overall market entry strategy. In the following sections, we will discuss how to identify your target market, analyse the market, and select the most fitting market entry strategy for your business. See How Vision2Success Can Drive More Sales To Your Business 3.0 Identifying Your Target Market Identifying your target market is one of the most crucial steps in planning a market entry strategy. Your target market represents the specific group of consumers who are most likely to benefit from and purchase your product or service. Identifying these individuals or businesses with precision can significantly enhance the effectiveness of your marketing efforts and optimise resource allocation. Here are some key steps in identifying your target market: Understand Your Product or Service: Begin by taking a deep dive into your product or service. What problem does it solve? Who is likely to need or want what you’re offering? What are its unique selling points, and who would value these the most? Segment the Market: Market segmentation involves dividing the broader market into distinct groups based on characteristics such as age, income, lifestyle, geographic location, and buying habits. A well-segmented market can help you identify potential customers who share similar needs and behaviours. Analyse Your Competitors: Look at who your competitors are targeting. You might identify underserved segments that your business could target more effectively or decide to target the same segments with a superior product or marketing approach. Research Consumer Behavior: Understand what drives the purchasing decisions of your potential customers. Look at cultural, economic, and social factors that could influence their behaviour. Tools such as customer surveys, focus groups, and market research reports can be invaluable in this step. Consider Your Business Capacity: While it may be appealing to target a large, diverse market, it’s essential to consider your business’s ability to serve that market effectively. Think about your production capacity, distribution capabilities, and marketing resources. Create Customer Personas: Develop detailed profiles of your ideal customers, including their demographics, psychographics, needs, and behaviours. These personas can guide your product development, branding, and marketing strategies. Once you’ve identified your target market, it’s essential to keep evaluating and refining this understanding. Markets are dynamic, and consumer preferences can change over time. Regularly reviewing your target market can ensure your business stays aligned with your customers’ needs and expectations. Remember, knowing your target market won’t just inform your market entry strategy—it will also underpin the effectiveness of all your marketing efforts. In the next section, we will delve into analysing your target market, which will further help you in shaping your market entry strategy. 4.0 Analysing the Market After you’ve identified your target market, the next crucial step is to conduct a thorough market analysis. This research process involves collecting, reviewing, and interpreting data about the market you plan to enter. It helps you understand the market dynamics, competition, and the needs and behaviours of potential customers. Here are key steps involved in analysing your target market: Size and Growth Potential: Begin by estimating the total size of your target market and its potential for growth. This will help you understand the revenue potential and long-term viability of your market entry. Use factors such as population size, demographic trends, market trends, and consumer spending data to inform your estimates Market Trends: Identify current and future trends in your target market. This includes customer behaviours, preferences, and demands, as well as broader social, economic, and technological trends that could impact your market. Competition Analysis: Identify who your competitors are in this market, what they offer, and how they position themselves. This can help you find a unique niche or competitive advantage. Tools like a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) can help you compare your business to competitors. Regulatory Environment: Understand any laws, regulations, or cultural practices that could affect your business in the target market. This could include trade policies, consumer protection laws, industry-specific regulations, or local customs and cultural practices. Economic Factors: Consider the economic environment of your target market, including factors such as local economic growth, income levels, employment rates, and exchange rates. This can impact consumer spending and the overall viability of your market entry. Distribution Channels: Identify the most effective ways to get your product or service to customers in the target market. This could include online platforms, local retailers, wholesalers, or direct sales methods. Barriers to Entry: Look for any obstacles that might prevent or make it difficult for your business to enter the market. This could include high startup costs, strong competition, regulatory hurdles, or lack of consumer awareness. Consumer Behaviour: Dive deeper into the needs, preferences, and buying behaviours of your target customers. Understand what motivates their purchases, how they make buying decisions, and what factors could influence their loyalty. Conducting a thorough market analysis can provide invaluable insights that inform your market entry strategy. It can help you position your product or service effectively, anticipate challenges, and identify opportunities for growth and differentiation. Armed with this knowledge, you can confidently select the most suitable market entry strategy, which we’ll discuss in the next section. 5.0 Selecting the Right Market Entry Strategy Having identified your target market and analysed the market conditions, the next step is selecting the most appropriate market entry strategy for your business. This decision will significantly shape your venture’s trajectory and profitability in the new market. As outlined earlier, there are several strategies you can adopt. Here’s how to narrow down to the one that aligns best with your business objectives and capabilities: Consider Your Business Goals: Different entry strategies can serve different business goals. For instance, if rapid growth and large market share are your primary objectives, strategies like Foreign Direct Investment (FDI) or Joint Ventures may be worth considering. On the other hand, if your aim is to minimise risk while expanding internationally, strategies like exporting or licensing could be more suitable. Assess Your Resources: The resources at your disposal, including financial, human, and logistical capabilities, should heavily influence your decision. Some strategies, such as FDI, require a significant investment of resources, while others like exporting or piggybacking require less. Evaluate Market Conditions: The market analysis you performed will provide insights that influence your strategy selection. Factors like the level of competition, regulatory environment, cultural differences, economic stability, and potential growth will play a significant role. Understand Your Risk Tolerance: Some strategies involve higher risk than others. For example, while FDI offers potential for higher returns and control, it also involves more risk compared to exporting or licensing. Understand your organisation’s risk tolerance before deciding on the entry strategy. Define Your Competitive Advantage: Your unique selling proposition or competitive advantage can also dictate the best entry strategy. For instance, if your business has a unique product technology, you might prefer licensing or franchising to capitalise on it without substantial logistics or marketing expenses. Consult with Experts: Market entry is a significant step, and getting professional advice can be beneficial. Business consultants, market research firms, or legal advisors who specialise in international business can provide valuable insights and help you navigate complex decisions. Learn from Others: Look at case studies of other businesses in your industry or region that have entered similar markets. Their experiences can offer valuable lessons and help you avoid potential pitfalls. Remember, the market entry strategy you choose isn’t set in stone. It’s wise to continuously monitor your strategy’s effectiveness and adapt it as necessary once you’ve entered the market, which we’ll discuss in later sections. By carefully selecting your market entry strategy, you set the foundation for a successful and profitable venture in the new market. 6.0 Creating a Market Entry Plan Once you’ve identified your target market, analysed the market conditions, and selected the most suitable entry strategy, the next step is to formulate a comprehensive market entry plan. This plan serves as a roadmap detailing how you will implement your chosen strategy and achieve your business objectives in the new market. Here are some key steps in creating your market entry plan: Define Your Objectives: Start by outlining what you hope to achieve by entering the new market. This could include specific goals related to revenue, market share, brand awareness, customer acquisition, or long-term growth. Make sure your objectives are SMART: Specific, Measurable, Achievable, Relevant, and Time-bound. Develop Your Product or Service Offering: Based on your market analysis, you may need to adapt your product or service to meet the needs and preferences of your target market. This could involve changing your product features, packaging, branding, or pricing. Create Your Marketing and Sales Plan: Define how you will promote your product or service in the new market. This could include strategies related to advertising, public relations, social media, content marketing, sales promotions, and direct sales. Be sure to adapt your marketing message to resonate with your target customers in the new market. Establish Your Distribution Plan: Outline how you will deliver your product or service to your customers. This could involve setting up physical stores, partnering with local retailers or distributors, or selling directly online. Plan Your Operations: If your market entry strategy involves setting up operations in the new market, define what this will look like. This could include hiring and training staff, setting up production facilities, sourcing materials, managing logistics, or complying with local regulations. Set Your Budget: Outline the financial resources required to implement your market entry plan. This should include costs related to product development, marketing, distribution, operations, legal compliance, and any other costs associated with your chosen entry strategy. Define Your Timeline: Set a timeline for when you plan to start your market entry activities and when you hope to achieve your objectives. This should take into account any preparatory activities, regulatory approvals, or seasonal factors that could impact your timeline. Identify Potential Challenges and Contingencies: Lastly, anticipate potential challenges you might encounter and outline contingency plans for dealing with them. This could include competitive reactions, regulatory changes, logistical issues, or changes in market conditions. Creating a comprehensive market entry plan can help ensure a smooth and successful launch in your new market. It also helps to align your team around your market entry objectives and strategies, ensuring everyone is working towards the same goal. In the next section, we will discuss how to effectively launch your product or service in your target market. 7.0 Launching Your Product or Service After carefully crafting your market entry plan, the next crucial step is to execute a successful launch of your product or service in the target market. A well-executed launch sets the stage for attracting customers, generating sales, and establishing your brand presence. Here are key steps to consider when launching your product or service: Create a Compelling Value Proposition: Clearly communicate the unique value and benefits your product or service offers to customers in the new market. Craft a compelling message that resonates with their needs, pain points, and aspirations. This value proposition should be integrated into all your marketing and promotional materials. Develop a Marketing Campaign: Design a comprehensive marketing campaign to generate awareness and excitement for your product or service. Utilise various channels such as digital marketing, social media, content marketing, public relations, and advertising to reach your target audience. Tailor your messaging and marketing materials to the specific cultural and linguistic nuances of the new market. Adapt Your Branding and Positioning: Ensure that your brand identity, logo, packaging, and messaging align with the preferences and cultural context of the target market. This may involve adapting your branding to resonate with local values, aesthetics, and language. Leverage Influencers and Partnerships: Collaborate with influential individuals or organisations in the new market to amplify your reach and credibility. Engage local influencers or seek strategic partnerships with reputable businesses to help endorse and promote your product or service. Implement a Sales Strategy: Develop a sales strategy tailored to the target market. Determine the most effective sales channels, such as direct sales, e-commerce platforms, or local distributors, based on customer preferences and distribution capabilities. Train your sales team on the unique selling points of your product or service and equip them with the necessary tools to effectively communicate with potential customers. Offer Competitive Pricing and Promotions: Determine appropriate pricing strategies that consider local market dynamics, consumer purchasing power, and competition. Additionally, consider offering introductory promotions, discounts, or incentives to encourage initial adoption and build customer loyalty. Ensure Smooth Operations: Ensure that your operations, including production, supply chain, and customer support, are well-prepared to meet the demands of the new market. Streamline processes, establish efficient logistics, and provide excellent customer service to create a positive experience for your customers. Monitor and Measure Results: Continuously monitor the performance of your product or service in the new market. Track key metrics such as sales revenue, customer acquisition, market share, customer feedback, and brand awareness. This data will provide valuable insights for optimising your market entry strategy and making informed decisions for future growth. Remember that launching your product or service is just the beginning. Stay responsive to customer feedback, adapt your strategies as necessary, and remain agile in your approach. By closely monitoring the market response and making timely adjustments, you can maximise your chances of success in the new market. In the next section, we will discuss the importance of monitoring and adapting your market entry strategy to ensure sustained growth and profitability. 8.0 Monitoring and Adapting Your Strategy Once you have successfully launched your product or service in the new market, it’s important to continuously monitor its performance and adapt your market entry strategy as needed. The ability to assess and respond to market dynamics will enable you to stay competitive, maximise opportunities, and address challenges effectively. Here are key steps in monitoring and adapting your market entry strategy: Track Key Performance Indicators (KPIs): Define and regularly monitor relevant KPIs that align with your market entry objectives. These may include sales revenue, market share, customer acquisition and retention rates, customer satisfaction, brand awareness, and profitability. Analysing these metrics will provide insights into the effectiveness of your strategy and help identify areas for improvement. Collect and Analyse Customer Feedback: Actively seek feedback from your customers in the new market. This can be done through surveys, interviews, online reviews, or social media monitoring. Gain insights into their experiences, preferences, and suggestions for improvement. Use this feedback to refine your product or service offerings and enhance customer satisfaction. Stay Updated on Market Trends and Competitor Activities: Continuously monitor the market landscape, including changes in customer behaviour, emerging trends, and competitive activities. This can be done through market research, industry reports, competitor analysis, and staying engaged with industry networks and events. Identifying market shifts and competitive threats will help you adapt your strategy proactively. Evaluate the Performance of Distribution Channels: Assess the effectiveness of your chosen distribution channels in reaching and serving your target customers. Monitor sales performance, customer feedback, and logistical challenges associated with each channel. Consider optimising your distribution mix or exploring new channels to maximise market reach and customer convenience. Be Agile in Response to Market Feedback: Based on the insights gained from monitoring and analysing data, be prepared to make timely adjustments to your market entry strategy. This may involve refining your product offerings, adjusting pricing strategies, revising marketing campaigns, or exploring new partnerships. Remaining agile and adaptable will enable you to address evolving market needs effectively. Continuously Improve Operations: Regularly evaluate your operational processes and supply chain efficiency to ensure smooth and reliable delivery of your product or service. Identify areas for optimization, cost reduction, or enhanced customer experience. Implement improvements to drive operational excellence and maintain a competitive edge. Invest in Market Research: Conduct periodic market research to gain deeper insights into the evolving needs, preferences, and behaviours of your target customers. This will help you identify emerging market trends, uncover unmet needs, and innovate your offerings accordingly. Seek Expert Guidance: Consider engaging market consultants or specialists with local market knowledge and expertise to provide guidance and support in refining your market entry strategy. They can offer valuable insights, conduct market research, and help you navigate challenges specific to the target market. By actively monitoring market trends, customer feedback, and performance metrics, you can make informed decisions to adapt your market entry strategy for sustained growth and profitability. Remember that successful market entry is an iterative process that requires continuous learning, experimentation, and optimisation. In the next section, we will explore a case study of successful market entry strategies to provide practical examples and insights for your own market entry journey. 9.0 Example Case Study: Successful Market Entry Strategies To gain a deeper understanding of how market entry strategies can lead to success, let’s explore an example case study highlighting how a company could effectively penetrate a new market. This example case study showcases the importance of strategic planning, market research, and adaptability. Company: XYZ Medical Tech Solutions XYZ Medical Tech Solutions is a software development company specialising in AI-powered solutions for the healthcare industry. After achieving significant success in its domestic market, the company decided to expand its operations internationally. They identified Country A as a potential market due to its growing healthcare sector and favourable regulatory environment. Market Entry Strategy: Thorough Market Research: XYZ Tech Solutions conducted extensive market research in Country A, analysing the healthcare landscape, regulatory requirements, competitive landscape, and customer needs. They identified a gap in the market for advanced AI-driven solutions that could streamline patient data management and improve healthcare outcomes. Partnerships and Alliances: Recognising the importance of local expertise and market connections, XYZ Medical Tech Solutions formed strategic partnerships with local healthcare organisations and technology providers in Country A. These partnerships enabled them to leverage established networks, gain market insights, and ensure compliance with local regulations. Customisation and Localisation: XYZ Medical Tech Solutions tailored its software solutions to meet the specific needs of the healthcare providers in Country A. They incorporated local language support, adapted user interfaces to align with local practices, and ensured compliance with regulatory requirements unique to the market. Targeted Marketing and Thought Leadership: To raise awareness and position themselves as industry leaders, XYZ Medical Tech Solutions invested in targeted marketing campaigns and thought leadership initiatives. They collaborated with local healthcare associations, published industry white papers, and participated in key industry conferences and events. Pilot Projects and Testimonials: XYZ Medical Tech Solutions initiated pilot projects with select healthcare providers in Country A to demonstrate the effectiveness of their solutions. The successful implementation of these pilot projects generated positive testimonials and case studies, which further bolstered their credibility and attracted interest from other healthcare organisations. Results and Adaptations: Through their well-executed market entry strategy, XYZ Medical Tech Solutions could achieve significant success in Country A. They could secure key partnerships with prominent healthcare providers, leading to a steady stream of customers. The company quickly adapted to market feedback, continually refining and enhancing their solutions based on customer needs and evolving regulatory requirements. As the market evolved, XYZ Medical Tech Solutions expanded its offerings to include additional modules and services that catered to specific market segments. This agility and responsiveness to customer demands allowed them to stay ahead of the competition and solidify their position as a trusted provider of AI-powered healthcare solutions in Country A. Key Takeaways: Thorough market research and understanding of the local market dynamics are critical for a successful market entry. Building strategic partnerships with local organisations can provide valuable market insights and facilitate market penetration. Customising products or services to align with local preferences and regulatory requirements increases their acceptance in the target market. Thought leadership initiatives, targeted marketing campaigns, and pilot projects can establish credibility and generate interest in the new market. Adaptability and responsiveness to market feedback are essential for sustaining success and maintaining a competitive edge. This case study exemplifies how a well-planned market entry strategy, coupled with adaptability and customer-centric approaches, can lead to successful expansion into new markets. By applying similar principles to your own market entry strategy, you can increase your chances of achieving favourable outcomes. In the concluding section, we will summarise the key insights from this comprehensive guide and emphasise the importance of a robust market entry strategy. 10.0 Conclusion Developing a comprehensive market entry strategy is a critical undertaking for businesses seeking to expand into new markets. It involves understanding the target market, analysing market conditions, selecting the right entry strategy, creating a market entry plan, executing a successful launch, monitoring performance, and adapting strategies as needed. By carefully identifying the target market, businesses can align their offerings with customer needs and preferences. Conducting a thorough market analysis enables them to assess the competitive landscape, identify opportunities, and anticipate challenges. Selecting the most appropriate market entry strategy ensures a focused and effective approach. Creating a market entry plan outlines the steps necessary for successful market entry, including product adaptation, marketing campaigns, distribution strategies, and operational considerations. Launching the product or service requires a compelling value proposition, effective marketing, and sales strategies to attract customers and build brand presence. The journey does not end with the launch, however. Monitoring the market, tracking key performance indicators, collecting customer feedback, and staying updated on market trends enable businesses to adapt their strategies and stay ahead. Being agile, responsive, and open to refining operations and offerings is crucial for sustained success in the new market. The case study of XYZ Medical Tech Solutions demonstrated the importance of strategic planning, partnerships, customisation, targeted marketing, and adaptability in achieving success in a new market. Their approach serves as an example of how a well-executed market entry strategy can lead to growth and establish a strong foothold. In conclusion, developing a robust market entry strategy is an essential component of expanding into new markets. It requires a deep understanding of the target market, diligent market analysis, strategic planning, and the flexibility to adapt to changing circumstances. By implementing these principles, businesses can navigate the challenges and seize the opportunities presented by new markets, positioning themselves for long-term success and growth. Table of Contents You might also be interested..... Supercharging Marketing Communities: Unleashing the Power of AI for Unrivalled Engagement and Growth 8 Steps On How To Create a Marketing Plan Crafting a Winning Digital Marketing Strategy: A Step-by-Step Guide The Ultimate Guide to Structuring Your Digital Marketing Strategy How to Develop a Marketing Strategy and Implementation Plan Grow Your Business Online Marketing Strategy Course Book In A Consultant Consultancy Marketing Support Service Part-time Marketing Manager Digital Marketing Reporting and Analysis Route to Market Strategy & Implementation Plan Community Hub Keep In Touch 0333 050 9053 [email protected] KUB Ltd 2nd Floor, Albion Wharf, 19 Albion Street, Manchester M1 5LN Copyright (C) 2001-2022 KUB Ltd. All Rights Reserved. Registered in England and Wales. Company Reg. 03215922 Privacy & Cookie Policy Get your free copy.... Your guide to creating the best digital marketing strategy. Organization Transformation © 2024 Copyright Heyd Strategy Case Studies Market Entry Strategy for an Energy Company All Insights 1. Situation An established energy company aimed to evaluate potential pathways into the Sustainable Fuel Industry. The project aimed to develop a comprehensive market entry strategy for the emerging sustainable fuel sector. It required an understanding of this evolving market, its various segments and potential routes for entry, and viable partnering opportunities. 2. Approach The “Where to play?” phase involved a thorough analysis of the upstream and downstream markets. We examined technology maturity, supply and demand drivers and the market price structure. Our review extended to industry segments, applications, and products, providing a holistic view of the market landscape. Next, the “How to win?” phase focused on identifying success factors for players along the value chain, along with commercialization options. We explored various business model options, evaluated market entry concepts, and screened potential project partners. A key goal was to identify the strategic sweet spot for the client — where existing capabilities could be leveraged, customer demand was evident, and potential advantage over existing and emerging competitors was reasonably achievable. In the final “When to play?” phase, we evaluated the optimal timing for market entry, considering a spectrum of market entry modes: Organic growth options, targeted M&A, partnering, joint ventures, or technology development. We also examined time-to-revenue and entry sequencing options broadening the client’s understanding of potential pathways for entry. Meanwhile, we considered the project landscape, identifying the fit with potential partners and managing external market uncertainties such as regulatory changes, technology evolution, oil price fluctuations, and globally disruptive events. The analysis led to a robust understanding of the market’s attractiveness. We also identified synergies with the client’s existing core business, aiding in a seamless transition to integrated operations. Moreover, we offered concrete entry strategies, evaluated in terms of their potential contribution, and fit with the client’s objectives. We proposed clear avenues and partnerships options across the industry’s value chain, opening up diverse opportunities for growth and expansion. Elevating the Role of a Strategy Department Navigating an Automotive Company Through Unforeseen Shocks with Scenario Planning Bringing a Subsidiary of a Holding Company from Good to Great Unlocking the Successful Strategy Implementation for an IT Company in the Middle East Stay up to date. Keep up to date with our latest news and insights " * " indicates required fields Get in touch to book a call or to learn more about our services Market Entry Market entry could be a possible solution that may not be obvious at the beginning of a case, market entry problems have two variations, according to the ansoff matrix. Introduction of an existing product in a new market (market development)ge.com/en/case-interview Introduction of a new product in a new market (diversification) As you know from the Ansoff Matrix , usually  growth questions  require a market entry strategy for the case interview solution. “Our business model is currently stagnating. What should we do?” Use the following five steps to approach a market entry case 1. Paraphrase and clarify the objective at the beginning (same as all other cases) As usual, take good notes! Start with paraphrasing the problem and clarify all questions to make sure you understand the problem. Take a minute to structure your thoughts and decide the questions you want to ask based on the structure. In short, in order to have a market entry strategy, you need to: Understand the company and its current market, and also the new market the company wants to enter. Evaluate the financial aspects. Evaluate the economic implications of entering the market. If it makes sense, decide how: Through organic (independently) or inorganic (inter-dependently)? If inorganic, then would it be through a Joint Venture or M&A? Frameworks such as  Porter's Five Forces  can help you structure thoughts and systematically uncover key information. But, in an interview, avoid saying that you are using Porter's Five Forces or any other standard framework as you run the risk of portraying yourself as force-fitting a framework.  2. Understand the client's company Understand why the client wants to enter the new market and identify the key issue. Knowing this piece of information will be important in making the final recommendation.  Other important information: What are current revenue streams? What are the client's key strengths and weaknesses? ( SWOT ) What is the product mix? How many and what types of product lines, brands, variations of products does the company have? What is the lifecycle of each product? Also, how closely related are the current products? Who are current customers, and how are they segmented? What are the current distribution channels? What is the client's current financial situation ? 3. Understand the market of interest Understand the market the client wants to enter and evaluate its attractiveness. Start by estimating the market size if that information is available (it is implied that you would first need to estimate market size in such cases). What is its growth rate ? At what stage of the lifecycle  is it? Emerging, Mature, Declining? What are the customer segments, and what are their respective needs? Is there a key technology involved? If so, how quickly is it likely to change? What are current trends in the industry? Who are the key players in the market? What is their market share? What are their differentiating factors? What is their response to the determined key trends? Are there substitute products? 4. Evaluate the financial aspects Key questions: Costs: What are barriers to market entry (i.e. investment costs)? Costs: What are expected fixed and variable costs? Revenues: What is the expected price of the product for and how many units are expected to be sold? After how many years will the client break-even and what is the rate of return ( understand that money has a different value over time )? 5. Evaluate the economic implications of entering the market Remember you do not need to investigate  all  these questions, but you do need to evaluate and understand what questions are important by considering the reasons the client wants to enter the market.  If you decide that entering a new market is a good idea, it would make sense to recommend to the client  how to do it . Entering a new market can be generally done in three key ways: Start from scratch Through a Joint Venture Through M&A Based on the data, if you decide that the venture is not a good idea, recommend an alternative plan (product differentiation, cost-cutting, international presence, etc.). Since you now know the company structure, the “old” and the "new" market, make sure to structure your recommendation. Competitive advantage : Can you apply the same business strategy as in your current market, or do you have to adapt the product, marketing, or even sales channels to reach customers? Timing:  Can you lever a first-mover advantage, or would you rather let the competitors try their luck first? Speed of entry:  Define whether you want to test a single store or region, or whether you want to cover the entire market at once. Entry mode:  How much commitment are you looking at? Would it be a simple export strategy, where you can exit easily but have less control, OR a wholly owned subsidy, where investment costs are high, but you also have more control? The organizational structure  of the new branch: Do you want to decide centrally or leave lots of freedom to the individual manager of the country? Once you have all your answers, synthesize them to give a recommendation based on the facts you collected. Don't forget to take another minute to structure your answer but make sure to provide your answer first and then the reasons! Check out our article about the  pyramid principle for more details regarding communication.  Key takeaways Market entry cases are often hidden in other case types, such as cases involving increasing revenues of a company. Look for the most  critical success factors  for the client. When developing a market entry strategy, focus on how the new market fulfills the success factors sought by the client. Make sure to lay out several different market entry strategies  and evaluate those against each other. Questions on This Article Cost revenue and entry strategy, why assessing 2. company financials prior to 3. targeted market/customer interest, market entry case with multiple choices, related cases. RWE Consulting Case: Floating Wind in Japan EY-Parthenon Case: Nachhaltiges Geschäftsmodell OC&C Strategy Consultants Case: Expansion einer Schmuck Agentur in China CTcon Case: Das beste Eis der Stadt! tkMC Case: Portfolio expansion in the material trade business Select category General Feedback Case Interview Preparation Technical Problems Strategies for Market Entry and Business Expansion Expanding your business into new markets is a strategic move that can unlock global growth opportunities. In this comprehensive guide, we explore the strategies and tactics for successful market entry and business expansion. Whether you’re eyeing international markets or seeking to broaden your domestic reach, our insights will help you navigate this transformative journey. Unlocking Global Growth Introduction Market Entry Strategies Market entry is a critical phase in expanding your business. Consider these strategies: Exporting: Start by exporting your products or services to international markets. This low-risk strategy allows you to test the waters. Joint Ventures: Partner with local companies in the target market to share risks and leverage their expertise. Franchising: Expand through franchising, granting others the right to operate your business model in different locations. Mergers and Acquisitions: Acquire existing businesses in your target market to quickly gain a foothold and access their customer base. Business Expansion Tactics Once you’ve entered new markets, effective expansion tactics are essential: Adapt to Local Culture: Understand and respect local cultures, customs, and preferences to tailor your offerings accordingly. Invest in Marketing: Develop localized marketing strategies to reach and engage with your target audience effectively. Build Strategic Partnerships: Collaborate with local businesses, suppliers, and distributors to strengthen your presence. Continuous Innovation: Stay ahead by continually innovating your products or services to meet changing market demands. Benefits of Global Growth Expanding your business globally offers numerous advantages: Increased Revenue: Access new customer segments and revenue streams in untapped markets. Risk Diversification: Spreading your operations across multiple markets can mitigate risks associated with economic downturns in one region. Competitive Advantage: Gain a competitive edge by being a global player with a diversified portfolio. Brand Recognition: Enhance your brand’s recognition and reputation on a global scale. Government Resources Government websites provide valuable resources to aid in your market entry and business expansion efforts. Here are some reputable .gov resources: Explore the U.S. Commercial Service’s Export.gov for market research, export guides, and trade data. Access funding and support programs for expanding businesses from the U.S. Small Business Administration (SBA) . Learn about trade regulations and international trade agreements from the U.S. Department of Commerce . Discover export financing options and resources on the Export-Import Bank of the United States (EXIM) website. Case Study: Global Expansion Success Let’s explore a real-life case study of a company that successfully expanded globally: In 2019, Company XYZ, a tech startup, sought to expand its software solutions into international markets. They: Conducted thorough market research using resources from Export.gov , identifying high-demand regions. Formed strategic partnerships with local IT firms to provide customized support and implementation services. Implemented a targeted marketing campaign, considering cultural nuances and preferences. Complied with trade regulations with guidance from the U.S. Department of Commerce . Their efforts paid off. Within two years, Company XYZ established a strong global presence, with international markets contributing over 40% of their total revenue. Market entry and business expansion are transformative steps that can lead to unprecedented global growth. By utilizing effective strategies, tactics, and government resources, you can navigate the complexities of expanding your business. Unlock new opportunities, diversify your revenue streams, and gain a competitive edge in the global marketplace. Arthur Mansourian , who works out of the Beverly Hills office, has a 12-year track record as both a management consultant and investment banker. He played an instrumental role in making NMS Consulting a Top 10 Cybersecurity Company and a Top 50 Fastest Growing Company. Arthur holds the Certified Information Privacy Professional, United States (CIPP/US) certification from the International Association of Privacy Professionals (IAPP). His expertise lies in providing data privacy and cybersecurity consulting regarding protocols, data breaches, and practices in regard to GDPR, GDPR-K, CCPA, CPRA, HIPAA, SB 220, and other relevant regulations. Aykut Cakir , Managing Director, Partner and Head of Turkey, has a demonstrated history in Negotiations, Business Planning, Business Development and as a Finance Director for gases & energy, pharmaceuticals, retail, FMCG, and automotive industries. Mr. Cakir has worked for major Fortune 500 companies such as Procter & Gamble, Roche Pharma Group, John Deere, and Linde Gas. He has twenty-eight years of experience in Operational Finance, Accounting and in General Management, with international business experience including in the USA, Europe, Middle East and Turkey.  Mr. Cakir holds a Bachelors degree in Finance and Economics from the University of North Carolina. Related Posts Insights , NMS How Management Consultants Help Businesses with Market Entry How Management Consultants Can Help a Business Increase Revenue How to Increase your Business’ Profitability Some U.S. state privacy laws offer their residents specific consumer privacy rights, which we respect as described in our  Privacy Policy . To opt-out of our making available to third parties information relating to cookies and similar technologies for advertising purposes, select "Decline All". To exercise other rights you may have related to cookies, please see our Cookie Policy . How to crack market entry consulting cases? Market entries can be at the core of a company's strategy for years and involve huge amounts of money. For instance, Uber has raised more than $20bn since it started its international expansion in 2011. And it is likely to raise even more in the future to try to strengthen its foothold in Europe, Asia, etc. Market entries are uncertain situations and can therefore be quite stressful for executives. They can literally make or break companies. As a consequence, top consulting firms such as McKinsey, BCG and Bain are often brought in to help during these key moments. There is therefore a good chance that you will come across a market entry case at some point during your consulting interviews and it is important that you prepare for this situation. Let's first analyse what framework you should use in your market entry cases. And let's also discuss a few examples of successful and failed market entries and try to learn from them. Click here to practise 1-on-1 with MBB ex-interviewers Market entry case framework. There are two broad types of market entry situations companies face: Entering a new geography. For instance, Uber entering the Chinese market. Entering a new product category. For instance, Apple launching an electric car. In both cases, partners at McKinsey, BCG and Bain tend to broadly analyse the same four areas in their framework. Let's step through each of them one by one and list the questions you'd want to answer for each category. The first area consultants typically analyse in market entry cases is the market. This is extremely important because a big part of the success or failure of the new venture will depend on broader market dynamics. Here are some of the questions you could look into: Who are the customers? And what products do they buy today? How big is the market? And how fast is it growing? How profitable is the market? And is its profitability stable? How intense is the competition? Are there more and more players? How heavily regulated is the market? Are there barriers to entry? Note you can get inspiration from Porter's 5 forces for this section of your framework. If you would like more details about it, you can read our . 2. Capabilities Second, once they understand the market in detail, consultants typically try to figure out how hard it will be for their client to win in that market. This is important because a market can be very attractive but the company might not have the required capabilities to succeed in that market. What are the main differences between the company's current market and the new market? How difficult is it for the company to develop / hire new capabilities to adapt to these differences? Has the company ever done any new market entries in recent years? If so, how successful was it and what has it learned? Have other people similar to the client tried to enter the new market in the past? Is there anything we can learn from their attempt? 3. Financials The third important area to analyse is the financials. Your objective here is to understand how attractive it is financially to enter this new market: What's the current financial situation of the client? Does it have spare financial resources to invest? How much will it cost to enter the new market (e.g.: setting up new factories, recruiting a team, etc.)? What will be the ongoing costs once the market is entered (e.g.: variable cost of manufacturing, advertising to build brand, etc.)? What are the expected revenues from the new market? Through which channels / customers will they be achieved? What is the overall Return on Investment we can expect from the market entry? 4. Entry strategy And finally, the last area consultants typically analyse is HOW to enter the market. Planning the exact operational mechanics that will be used is key in order to succeed. When should the company enter the market? Is there a first mover advantage or is it better to wait for a few competitors to try first? At what speed should the company enter the market? Test a region first, or enter the whole market at once? Should the company establish its own entity and have full control? Or should it buy / build a Joint Venture with a competitor? Should the company control the market entry from its head office? Or should it give a lot of freedom to the new country manager? It is almost impossible to cover all these aspects in a 40mins case interview . Once you will have laid out your framework, your interviewer will then typically make you focus on a specific area of the framework for the rest of the case. This is usually the market, or the financials. But can also sometimes be the other two points. Market entry examples Now that you know what framework to use in market entry consulting cases, let's take a look at a couple of successful projects, and a couple of failures. As you read through these cases, we'd encourage you to take a few minutes to apply the framework above to the company we are describing. Success #1: Starbucks in China For thousands of years, the Chinese have produced and drank tea. When Startbucks announced it would enter the market in 1999 most people doubted it would be successful. Indeed, coffee had always been a distant second beverage compared to tea in the country. So how did the American brand manage to grow from 0 stores in 1999 to more than 1,500 today? How did it manage to sell coffee to a nation of tea drinkers? The answer is that Startbucks understood they were not selling just coffee, they were selling an experience. To be more precise, they were selling a "third place" that is neither home nor work, and where one can feel comfortable spending time with friends. And it turned out the Chinese needed this "third place" as much as anyone else. Success #2: Redbull in the US Redbull's market entry in the US has been so successful and smooth that many Americans don't realise it is actually a European company (Austrian to be precise). When it first got into the US, the energy drink category was almost did not exist. And giants such as Coca-cola were dominating the beverages industry. So how did the small Austrian company manage to become a household brand with a strong followership? The answer is that Redbull knew it would not be able to compete in mass-market advertising and decided to innovate on marketing. Instead of running ad campaigns on TV it started sponsoring extreme sports competitions (e.g.: cliff diving, surfing, etc.) which made it stand out as a very differentiated brand and eventually contributed to its success. Failure #1: Uber in China China is one the most attractive ride-hailing markets in the world. It has one of the highest population densities, and about 10 of the 30 largest cities on the planet. This makes it an ideal playground for companies like Uber and in 2013 the American start-up decided it wanted a share of the market and started investing heavily. But in 2016, after 3 years of efforts, it had to pull back and sell its Chinese business to a local competitor. So why did Uber fail in China? What should it have done differently? The main reason is timing. When Uber entered the Chinese market, there was already an established and well-funded brand called Didi Chuxing. Uber and Didi faced off for three years but the American company never managed to acquire more than 20% of the market. In 2016, it was already losing $1bn in the country and had to sell to its local competitor to refocus on other international markets. Failure #2: Fire Phone by Amazon Amazon was extremely successful with its e-reader Kindle. So in 2014 it decided to try to enter the phone market. This was a risky move but the Seattle company thought it would be able to replicate its Kindle success in a different market. Unfortunately it wasn't and it had to discontinue the production of its new phone only 13 months after it started. So why didn't Amazon manage to replicate its Kindle success? What was different about mobile phones? The main reason is the intensity of the existing competition. The Fire Phone was a good phone but a lot of good phones were already available (e.g.: the iPhone). That wasn't the case in the e-readers market where the Kindle really made a big difference when it launched. Market entries can make or break companies and executives sometimes feel they need support from consultants in these situations. You should therefore expect to come across market entry cases during your consulting interviews. Getting familiar with the framework we have laid out above is a good idea. But as we have already mentioned in the past, you should not reuse frameworks as is in your actual interview. You should customise them as much as possible to make them relevant to the problem you are trying to solve. Mock interviews The best way to improve at case interviews is to practise interviewing out loud, and you can do that in three main ways: Interview yourself (out loud) Practise interviewing with friends or family Practise interviewing with ex-interviewers Practising by yourself is a great way to get started, and can help you get more comfortable with the flow of a case interview. However, this type of practice won’t prepare you for realistic interview conditions.  After getting some practice on your own, you should find someone who can do a mock interview with you, like a friend or family member. We’d also recommend that you practise 1-1 with ex-interviewers from top consulting firms . This is the best way to replicate the conditions of a real case interview, and to get feedback from someone who understands the process extremely well. Click here to book your mock case interview. Related articles: Home • Knowledge hub • The ultimate guide to market entry The ultimate guide to market entry Entering a new market can lead to a massive boost to sales, brand strength and long-term profits. But there’s more to a market entry strategy than great products or services. Understanding the local market – its distribution channels, culture, economic and social trends – through a market research-driven due diligence process is crucial. And sometimes the most valuable insight is the hidden reason why you shouldn’t proceed… The art and science of market entry Over the past 40 years globalization has redefined what it is to be an international brand. For decades, a handful of dominant players in markets such as food and drink (driven by marketing prowess) or automotive (reliant on economies of scale) had been able to enter new markets in ways that most businesses simply couldn’t imagine. The rapid growth of global trade capacity, and particularly the ubiquity of the internet, has levelled the playing field. Today, a business in Bolton has myriad options for selling in Beijing; an Australian specialist retailer has lots of ways into the Austrian market. But the process of choosing which markets to enter, how and why remains fraught with danger. The rewards of opening up a new market are potentially great . On the other hand, the cost can be significant, and the list of powerful global brands that have failed to successfully enter new markets is a long. The factors to consider are varied: there are economic and social dimensions, competition from local companies, the quirks of regional distribution channels, cultural mismatches… and much more. That means undertaking a market-research-driven due diligence project before entering a new market is a must. Why look elsewhere? The reasons for market entry What motivates companies to investigate entering a new market? Every organization will have its own reasons. Exploring them in detail is a useful first step in defining the later market entry strategy. Brand growth  A huge proportion of value in modern enterprises is wrapped up in intangibles. That means increasing enterprise value requires diversification of the brand. Some very strong domestic brands can move into adjacent markets (Dyson, for example, can leverage its reputation for air-moving engineering from vacuums, to hand-dryers, to room fans and even hair straighteners). A select few can jump into non-adjacent categories (Virgin, for example). But opening up a whole new geographic market can establish a brand with many more consumers, boosting its value. Saturation of existing markets Once you have gained significant market share and consumer penetration domestically, it’s easy to see growth stall. Launching new products to address existing customers is costly and high risk. But taking proven products or services to a new market can create fresh upside for growing brands. Optimizing overhead costs As businesses grow, they build up overheads – around head office functions, for example. They also build up niche skills and experience – in fields such as logistics, legal or financial. These scale well: the more times you can put your experts to work in a new market, the more productive they are. And the more markets you have, the lower the amount each one pays to meet head office costs. Strategic partnership Globalization has meant businesses can easily work with partners in new markets – creating new opportunities for blended products and services. Local distributors, for example, might be pathfinders for a brand into a new market – demonstrating the potential for a more structured entry into that market. There are plenty of other motivations, often overlapping. Knowing which is driving the decision to explore new markets will help frame the strategy for successfully entering one. A phased approach to market entry There are different phases to a market entry project. You need to size the opportunity to judge whether it’s worth entering a new market. There ought to be concept testing, especially for new categories or innovations in that market. Many clients focus on competitor analysis when they’re dealing with less well-known rivals. Market entry has many dimensions – and no business is too big to skip them. We work with a number of high-profile Japanese brands, global names that are already present in different countries in some form of another. But they still need to tailor particular products or brands to the local markets they’re looking to exploit; and understand the specific needs of consumers in those categories. Market entry projects usually involve a series of questions, and typically each of these is a discrete engagement. Key questions for any market entry project Which markets might we look at? What is the macro environment like in a market we want to enter? How does the competitive landscape affect its attractiveness? What is the best way to enter the market in practical terms? How do we adjust our product, service or messaging to optimize our offer there? While market entry studies are a vital tool in successfully growing a brand somewhere new , sometimes their value comes from showing that entering a new market will not be successful. Around 50% of these projects results in a recommendation not to go ahead as planned. That finding can emerge at any one of the stages above. Far from being bad news, it’s often the most valuable insight a brand can get. Market entry can be costly and complex – not doing so when the conditions aren’t right can save massive amounts of money and time. Get regular insights Keep up to date with the latest insights from our research as well as all our company news in our free monthly newsletter. First Name * Last Name * Business Email * The world is your oyster. But where’s the pearl? A crucial first step in investigating markets for entry is to analyze why a brand, product or service is successful in its existing markets . How is it used? Who are the type of people that love it? What are those customers’ attitudes across different domains? What role does it play in their lives – and why? The next step is to look for markets where groups like this already exist . A good starting point can be detailed desk research – using tools like the CIA World Factbook for demographic information, or understanding cultural similarities to your home market through cultural awareness studies like the Hofstede Insights Culture Compass . But ultimately, it’s approaches developed precisely for the brand or product that will reveal good matches. Narrowing down the high-probability markets is hugely valuable for brands that don’t have other clues to go on. Sometimes brands do have a clear idea from the outset which markets they want to enter. We worked with a company producing ceramics which had a light-touch arrangement with an international distributor. They started to notice a significant uptick in orders from Korea – which was obviously a strong signal that entering that market could pay dividends. But that also meant understanding why was key to a successful market entry. Closer research revealed that an increase in purchasing power among the country’s middle class had made the designs more attractive; plus online shopping had taken hold and made previously hard-to-get products more visible. Target acquired. Now what? Next steps in a market entry project Specific country research starts with fundamental market insight and competitor intelligence work. Initially, that’s secondary research, analyzing available insights for the particular category in question. After that, we might move on to interviewing people whose knowledge of the market will provide more nuanced insights. Companies usually see this as their feasibility study , helping them understand who else is operating in their category, what regulations might be applicable, what the domestic distribution and supply chain infrastructure is like, and what investment they’re likely to need to make under different scenarios. That industry analysis and expert insight helps generate a strategic overview of the market tailored to the client. Often that’s enough to substantiate the decision on whether and how to enter a market, especially if it’s a close match with the brand’s existing markets. A good example is some work we did with an electronics brand looking to launch a new product in the US. The group already has a huge presence in America – but not for its new product, a battery system for domestic renewable electricity. Our project involved interviewing a range of potential stakeholders – such as real estate developers, housing associations, planning authorities and environmental regulators – to get a holistic view of how that market might evolve. That enabled the client to take a realistic view of both the existing appetite for the product and current regulations; and how the landscape might change as they developed the product. It’s not uncommon for a company to walk away at this point – there might be competitive, regulatory or infrastructure barriers that no mode of entry can overcome cost-effectively. Frameworks to assess a new market A structured framework can be valuable in assessing a new market. You might see great consumer interest – but if the regulatory stance is hostile, you have to think twice. One way of conducting a thorough overview of a market to pick up all those factors is to analyze the environment through different PESTLE lenses : P olitical – how stable is the country? What’s the prevailing ideology? What biases – intervention in markets, say, or taxation – do politicians have? E conomic – how rich is the country? How is wealth distributed? What’s growth like, and where is it likely to continue? S ocial – what’s the culture in the country? What are the typical social structures – family, work, community? What about religious norms? Education levels? T echnological – what’s the infrastructure like? How wired is the country? How lumpy is technology penetration? What about population ‘techiness’? L egal – what rules are there about business ownership? How about liability laws? What recourse do overseas businesses have in the courts? E nvironmental – how might the local climate affect the product or service? What about use of resources? Or end-of-life disposal of products? Porter’s Five Forces The next step is to get a grip on the competitive landscape, and that’s where tools such as Porter’s Five Forces come in. Michael Porter worked at Harvard University, and in 1979 he published a paper aiming to describe the ‘microenvironment’ for the attractiveness of any given industry – or, in this case, a new market. There are three forces from ‘horizontal’ competition: The threat of substitute products or services – what’s the alternative to your own offering that people might use? How are they achieving the same goals now, and what might shift their views? The threat of established rivals – bearing in mind that in a new market for you, there will be lots of players who know how to operate there better than you do. The threat of new entrants – being a new entrant to a market doesn’t mean others won’t follow, too. And if you’re establishing a new category in a market, that might tempt others in, or prompt local businesses to muscle in. Two forces come from ‘vertical’ competition: The bargaining power of suppliers – opening up a new market might help you gain economies of scale from higher sales volumes. But it also makes you more reliant on suppliers – especially around issues such as logistics. The bargaining power of customers – understanding the broader competitive landscape will help you see what choices customers have; but, especially in the initial phases, they might need to be tempted to switch brands or try a new category. Digging into the nuances Those kinds of analytical tools mean companies can enter a new market with their eyes wide open. But they’ll still need to develop a sophisticated view of customers, competitors and regulations – the kind of insights that will tell them how they might enter a market, not just whether it’s a good idea. That’s when they’ll commission more in depth market research and run projects like a market segmentation analysis to dig deeper into nuances they can exploit later to optimize their market entry. At this point, they’ll be starting to research more detail on potential partners; exactly how they would use infrastructure to import, manufacture and distribute in that market; what specific customer niches exist; and even financial planning to take into account the kind of regulatory and cost-of-trade analysis they revealed in the feasibility study. But above all they need to understand how their brand might be received. It’s not a given that you can simply transplant over your image or core messages. Culture and behavior: getting the key variables right Cultural fit is hugely important. In this phase of the project, we would drill down into the local factors that might help a brand; or create barriers for its acceptance. This is typically a traditional market research exercise, exploring the behavioral aspects of consumers in the new market. For example, we worked with a Japanese food manufacturer looking to expand into new Asian markets. But in the Philippines, it quickly became clear that there was no appetite for the more subtle flavorings and preservatives in the Japanese product. It was the perfect case of a potentially costly market entry being avoided through strong research findings. That’s a lesson Pret a Manger learned in Japan , where it opened 14 sandwich shops across greater Tokyo in 2003. Just 18 months later, the company withdrew after its local partner, McDonald’s Japan, pulled out citing heavy losses. Superficial research indicated that Japanese people would love the convenience and novelty of eating-on-the-go sandwiches. But once the novelty wore off, sales dipped quickly. That combination of financial and cultural barriers hadn’t been picked up. Speaking the language As well as deciding whether the consumer will use the product, it’s important to explore the way in which it’s marketed. This is particularly important for brand with an established global image – the logos, slogans and even color palettes that they’ve invested in heavily to define themselves – because those might have unexpected connotations in a new culture. Take, for example, the beauty treatment marketed in Japan as “for clear skin” – which translated elsewhere in Asia as “ghostliness”. There have been plenty of cases of companies that didn’t do their market research with disastrous consequences: Clairol’s ‘Mist Stick’ curling iron flopped in Germany: ‘Mist’ is slang for manure. Coors’s slogan ‘Turn It Loose’ translated into Spanish is slang for diarrhoea. KFC is known globally for being ‘finger-licking good’ – which translated as ‘eat your fingers off’ in China. Also in China, ‘Pepsi Brings You Back to Life’ was interpreted as ‘Pepsi Brings You Back from the Grave.’ But rival Coca Cola entered the China market much more deftly. Initially, signs produced by local distributors for ‘ko-ka-ko-la’ (using symbols for the closest phonetic translation) were translated as ‘bite the wax tadpole’. But the company was developing its own local brand positioning, and settled on the symbols ‘K’o-K’ou-K’o-lê’ – which means ‘to allow the mouth to be able to rejoice,’ a far more apt trademark that it registered in 1928. The money question – how to approach pricing The other marketing fundamental that research can steer is pricing – a factor every market entry project needs to examine. Where is the competitive price point for consumers in the new market? What volumes and margins might you expect, based on the market opportunity? How does the new market stack up cost-wise – are you importing or manufacturing locally, for example – and what does that do to your opportunity to flex prices? More broadly, the profitability of different business models often dictates whether and how to enter a new market at all. For some businesses there’s relatively little financial penalty to operating exclusively through local distributors. But at a certain point, issues such as volume of sales, cost of distribution, tariff levels, changes to local taxes and so on will shift the financial rationale. For example, we’ve already seen many UK businesses enter EU markets directly as a mean of offsetting post-Brexit tariffs, staffing, distribution and other costs. The financial calculations can also dictate the viable means of getting into a market. At one level, that’s purely a ‘treasury’ consideration. How will profits be repatriated? What are the currency risks associated with the new market? How does banking and taxation work there? But how much you can control the brand locally – rather than relying on local agents – is also a factor. (We’ll look at the different modes for entering new markets in more detail in a separate guide.) Know when to hold… and when to fold All these factors are a reminder that even strong and established global brands don’t always have an easy time expanding into a new market. They might have some leverage with their global brand name. They have the resources to invest in market penetration. But to do so effectively – and without incurring higher opportunity costs elsewhere – they need data and insights to ensure their entry is tailored. Even brands that take precautions to adapt to local culture can miss valuable clues as to their viability in a new market. Starbucks famously waited 47 years to open its first branch in Italy – wary of the very particular approach to coffee there. In 2018, its first shop opened in Milan. But the brand has struggled in the country. Limited research into new markets had affected the brand before, with its Australian business failing to meet the demands of local coffee-lovers; its Israeli operation closed in 2003 within two years of launch. Granular, holistic research is the key To gain the right insight to inform your market entry strategies , you’ll need to work with external agencies. For some very fast-growing and global brands, there might be a case for building an in-house team with the kind of expertise and experience needed to evaluate new markets in sequence. But when it comes to local research expertise and cultural understanding, the insights can often be two-dimensional. McDonald’s Japan is a great example of using local insight to tailor what is, on the face of it, a universal brand. Every country has their tiny variations in the McDonald’s menu. But visitors to Tokyo will find radical departures such as Ebi Filet-o (a burger with breaded shrimp); Teriyaki McBurger; and even chocolate fries. For many businesses – and business models – international expansion is likely to be a multi-year project with long pauses. That means bringing agencies to advise and evaluate each market entry is the only practical solution – especially if they bring specific knowledge on particular markets to bear. At Kadence, with offices spanning Europe , the US and Asia Pacific , we are well positioned to support brands with market entry research. Find out more about our market entry services or get in touch to discuss a potential project. Helping brands uncover valuable insights We’ve been working with Kadence on a couple of strategic projects, which influenced our product roadmap roll-out within the region. Their work has been exceptional in providing me the insights that I need. Senior Marketing Executive Arla Foods Kadence’s reports give us the insight, conclusion and recommended execution needed to give us a different perspective, which provided us with an opportunity to relook at our go to market strategy in a different direction which we are now reaping the benefits from. Sales & Marketing Bridgestone Kadence helped us not only conduct a thorough and insightful piece of research, its interpretation of the data provided many useful and unexpected good-news stories that we were able to use in our communications and interactions with government bodies. General Manager PR -Internal Communications & Government Affairs Mitsubishi Kadence team is more like a partner to us. We have run a number of projects together and … the pro-activeness, out of the box thinking and delivering in spite of tight deadlines are some of the key reasons we always reach out to them. Vital Strategies Kadence were an excellent partner on this project; they took time to really understand our business challenges, and developed a research approach that would tackle the exam question from all directions.  The impact of the work is still being felt now, several years later. Customer Intelligence Director Wall Street Journal Get In Touch " (Required) " indicates required fields Privacy Overview To read this content please select one of the options below: Please note you do not have access to teaching notes, market entry strategies in a high-tech successive generations market: a case study of three semiconductor firms with different entry modes. Journal of Business & Industrial Marketing ISSN : 0885-8624 Article publication date: 30 March 2020 Issue publication date: 15 December 2020 The purpose of this study is to explore market entry strategies in a high-tech successive generations (HTSGs) market, by investigating entry mode via entry timing and path differentiation and the performance outcomes of entry mode. Design/methodology/approach The methodology of building a theory from a longitudinal case study is adopted by using useful cases in a HTSGs market after constructing an integrated research framework to explore market entry mode. Different entry modes were investigated by studying entry timing and migration path of three firms’ case in logic semiconductor market. In addition, performance outcomes of different entry modes were measured and correlated with each other. The results identified three major entry modes suitable for a HTSGs market. The three firms differentiated their entry modes by exploiting different entry timings from the earliest to the last and different migration paths including switching, leapfrogging and new entrance path to enter a market. First mover advantage also exists in a HTSGs market, and it was found uniquely that the financial performance denoted by entry mode outcomes was correlated with technological knowledge. Research limitations/implications This study extends the theory of extant entry strategy from general consumer or industrial market to HTSGs market, in which intense competition exits and technological innovation is important. Moreover, this study verified that the causality between early entry and positive performance was also effective in HTSGs market with a shorter duration of early entry advantage. Practical implications This study has managerial implications for firms to establish market entry strategy in HTSGs market and other markets. To become a product leader, a fast follower or a late follower, firms can differentiate their entry mode by adjusting the entry timing and migration path in the context of market and technology. Originality/value This study examined market entry strategies suitable for HTSGs market based on its unique characteristics and extended relevant theory into HTSGs market. Further, an integrated research framework, which explores the market entry mode, was constructed to facilitate further exploration of entry mode into other markets. Entry strategy Entry timing High-tech successive generations market Migration path Park, C. (2020), "Market entry strategies in a high-tech successive generations market: a case study of three semiconductor firms with different entry modes", Journal of Business & Industrial Marketing , Vol. 35 No. 11, pp. 1751-1766. https://doi.org/10.1108/JBIM-08-2019-0354 Emerald Publishing Limited Copyright © 2020, Emerald Publishing Limited Related articles All feedback is valuable. Please share your general feedback Report an issue or find answers to frequently asked questions Contact Customer Support Consumer Trends and Market Entry Strategy in China Most Western and African companies find it challenging to penetrate the market successfully because the Chinese market is large and complex, with a couple of factors influencing consumer behaviors. Chinese consumers are at the forefront of demographic shifts and technological adoption, making it an interesting market to explore. Market entry strategies are a vital consideration for any company looking to explore the Chinese market, as are trends, and the Chinese culture. Other factors that shape the Chinese market are the high population, rising income, and other changing demographics. Overview of the Chinese Demographics and Consumer Behavior Considering the enormous size of the Chinese market, it is necessary to view the consumers in various demographic segments. China’s consumer markets are segmented into age, geographical regions, educational level, tech savviness, family size, and income levels. There is also a group of consumers that fall into the eco-conscious segment following the rising concerns about the environment. These set of consumers are more willing to pay for sustainable products and alternatives even though they are more expensive. Chinese consumers are made up of mostly young, educated people ages 20-40. Unlike their parents, young people in this category tend to purchase online and save less, as they prioritize quality over low prices. They believe that price is a notable indicator of the quality of a product; the higher the price, the better the quality, and then lower prices mean low quality. With the rise in income level and improvement of living standards, China has become the largest market for luxury brands. Consumers in the rising middle class are more focused on quality products. High-end products of major brands like luxury cars are sold in certain geographical locations such as Hong Kong, Shanghai, and Beijing, where people are not reserved in their spending. Technological savviness has also influenced consumer behavior. Since the emergence of e-commerce platforms, there has been a high rate of independent purchases by consumers. With millions of internet users in the country, the volume of online retail purchases and payments by consumers has increased greatly and is expected to increase in the coming years. Emerging Consumer Trends in China After the pandemic, new consumer trends began to rise. Chinese consumers have become more practical and less driven to take part in impulse spending. There is a rise in rational consumption whereby consumers are price-sensitive and purchase decisions are based on quality and functionality. According to a Chinese customer survey by Deloitte , a higher percentage of respondents expressed that they prioritize cost-effectiveness, family needs, durability, and aesthetics when making purchase decisions. Customers looking for cost-effective products proactively research brands and retailers offering promotional discounts and coupons for their products. Omnichannel customer service is another consumer trend in China. Customers need fast services and quick resolutions in their interaction with brands. Omnichannel is a recent trend and is preferred by customers because it lets them interact with brands across their various online media platforms and devices, and yet have the same customer experience. So far, this trend has boosted more loyal customers because it is a frictionless process that leaves customers satisfied. Chinese consumers are a tech-forward audience whose digital savviness is unmatched. Mobile payments have become a norm in retail purchases. The e-commerce trend in China shows that for businesses to be successful, they must have a strong digital presence on media platforms like WeChat as a customer service tool and Alibaba, which has integrated live streaming into its platforms. Most foreign brands leverage these platforms to boost customer engagement by hiring local influencers to entertain and highlight products in real-time, driving more sales and active purchases. Chinese Market Entry Strategies China has a robust digital economy and a huge customer base that is attractive to businesses and investors. Without well-planned market entry strategies, it could be tough for foreign brands to successfully penetrate and gain footing in a highly competitive market like the Chinese market. Most local players already have market dominance. It will take more than a nice product to not get defeated in the market. Here are ways to be ready for the competitive Chinese market. Research to learn more about the Chinese market:   The aim of researching before entering the Chinese market is to get to know your customers, understand how the market works, and know their competitors among already established local players. The Chinese market is large and always evolving. It will be an edge for businesses to understand market trends to stay ahead of the competition. Connect with local experts to help you navigate the market: Leveraging the knowledge of local industry experts is one way any business can gain access and thrive in a volatile market like the Chinese market. Local experts may also have customer contacts and a working sales network that businesses can leverage. Choose a suitable location: The most logical places to start when entering the China market are in top-tier cities with dense populations like Shanghai, Guangzhou, and Beijing. These markets have lower risks, fewer operational costs, and are good for testing foreign brands. Commercial opportunities with good infrastructures and fewer risks are also in other provinces like Wuhan, Tianjin, Chengdu, and Dalian. Create localized contents that align with the Chinese culture: Product localization that resonates with customer values and preferences is a way to boost customer satisfaction and loyalty. Businesses can choose to localize all their product documents that the public comes in contact with, such as product names, labels, and manuals. Contents on websites and social media platforms can be translated into the language of the region to better aid the understanding of the product by locals. Chinese are culture-sensitive and will always prefer any brand that mirrors their cultural values or beliefs. Choose appropriate social media platforms and sales channels: Some products do better in the physical market than on e-commerce channels. It is necessary to stay current with online trends and establish a digital presence that can aid customer engagement and support. Mode of Entry into the Chinese Market In setting up businesses in China, entry modes must be considered and coordinated to avoid disruptions of the business by the Chinese government regulatory bodies. There are three main modes of entry into the Chinese market. Each mode of entry is characterized differently based on legal status, business scope, invoicing and contracting, labor employment, and shareholder capacity. Wholly Foreign-Owned Enterprise (WFOE): This entry mode has three different types: a. Consulting WFOE: This LLC is permitted to operate as a consulting business in the Chinese service industry. b. Trading WFOE: This type of LLC is expected to register at Customs to import and export goods. Trading WFOE is only licensed to engage in wholesale and retail trading as well as other franchising activities. c. Production WFOE: LLCs under this category are permitted to manufacture goods in China but must pass through the Environmental Impact Assessment (EPA) before receiving a business license and beginning operation. Joint Venture (JV): Representative office (ro):, adapting market entry strategies to the chinese culture. China has a unique business culture that every brand doing business in the country must familiarize themselves with to be successful. Running a business in China requires an in-depth understanding of business etiquette, the language of communication, and the decision-making processes of consumers. China is not just a market. Its vast population makes it a goldmine for international businesses. With over 1.4 billion people, China presents a unique market opportunity with varying trends, tastes, and cultures. How do global brands successfully adapt their products to such varied audiences? Adapting products and services to the taste and culture of Chinese consumers requires a deep dive into understanding the market trends and consumer preferences. It is beyond translating and interpreting product labels. Brand content on e-commerce platforms, social media profiles, and company websites should be translated into the local languages that the Chinese consumers understand. Localization is a smart business strategy. It is a way of incorporating cultural nuances in product branding such that it appeals to the tradition of consumers. Brands can demonstrate respect for Chinese culture by actively participating in the region’s festivities. Recognizing and engaging the values and social norms of locals during product branding shows regard for their tradition, and in turn, boosts customer satisfaction and loyalty. An excellent way for a foreign company to avoid cultural pitfalls while introducing its product to the Chinese market is by hiring language translators and interpreters, as well as local experts who understand Mandarin as the primary language of communication, symbols, and tone of voice that resonates with the cultural heritage of the people. For instance, a successful adaptation by Starbucks is seen in its use of Chinese design elements in the ambiance of its store interiors and in its offer of tea-based beverages that appeal to the taste buds of local consumers. As the world’s second-largest economy, the Chinese market presents opportunities for businesses looking to expand globally. Brands can leverage their growing customer base by expanding their reach to a varied audience. GPI understands the complexities that come with entering the Chinese market. Market entry strategy gives brand direction and a clear plan on how its products and services can successfully penetrate any market. With our extensive industry experience, we offer strategies that help your business adapt its contents and products that resonate with the trends, tastes, and culture of the Chinese people. References: How China influences the global market Deloitte Chinese customer survey Consumer demographics in China Further GPI Resources on Culture Curation Topics Globalization Partners International (GPI) frequently assists customers with multilingual website design, development and deployment, and has developed a suite of globalization tools to help you achieve your multilingual website localization project goals. You can explore them under the  Translation tools and Portals section of our website. You may also find some of the following articles and links useful: For more information or help with your next website translation project, please do not hesitate to contact us via e-mail at  [email protected] , or by phone at (866) 272-5874, or by requesting a free  web translation quote on your next website translation project. How much will your translations cost and how long will they take? Get started with our Quick Quote Calculator for a real time estimate. Localization Project Manager 199 IMAGES The Ultimate Guide to Market Entry Case Interviews Market Entry Framework for Case Interviews & 8 Examples Sample market entry analysis Market Entry Strategy Case Interview Market Entry Strategy Case Interview Preparation: Market Entry Case EXPLAINED COMMENTS Market Entry Framework: How to Apply in Case Interviews In a market entry case interview, you are expected to evaluate an expansion opportunity (entry into new markets, new segments or new product lines in existing markets), decide whether the client company should pursue it, and, if yes, suggest an entry strategy. The underlying principle of the market entry framework is based on this process. Market Entry Framework: How to Use It + Consulting Case Example Tips On Using The Market Entry Case Framework. 1. Look for market entry cases buried inside other types of case study interviews. If a company is looking for growth, market entry is one way they might achieve it, so your revenue growth case could turn into a new product or new geographic market case. 2. Market Entry Case Interview: Step-by-Step Guide Market Entry Case Interview: Step-by-Step Guide Market entry case interviews are one of the most common types of cases you'll see in consulting interviews. They are also known as go to market case interviews. There is a very good chance you will see at least one market entry case in your upcoming interviews, especially in first-round interviews. Market Entry Case Studies Market entry cases are a recurring theme in the management consulting interview process. This is because consultants will frequently deal with market entry when working on real projects - which in turn means they are likely to base interview case studies on recent market entry work. Releasing new products and entering new markets is ... Market Entry Framework: The Expert Guide What is a Market Entry Case Interview? A market entry case interview is a crucial component of the consulting recruitment process. It's designed to evaluate your ability to analyze and solve real-world business challenges. In this type of interview, you're asked to assess whether a client company should enter a particular market. Market Entry Framework for Case Interviews & 8 Examples Learn how to apply the market entry framework in case interviews, types of market entry questions, and example case interview questions. Beating the odds in market entry It modified its entry strategy and performance expectations accordingly. 5. Using the reference class to set reasonable bounds on market share estimates also helps. If the reference class attained only a 3 to 5 percent market share, decision makers should pause when they see higher estimates. Step-by-Step Guide to Creating an Effective Market Entry Strategy 15 Types of Market Entry Strategies. Choosing the right market entry strategy is essential for successful expansion. Each strategy offers different levels of risk, control, and investment. By understanding these options, you can select the one that best fits your business goals and resources. Here are 15 common market entry strategies to ... Market Entry Strategy: Key Insights, Best Practices, and Case Studies A well-crafted market entry strategy is crucial to successfully penetrate foreign markets. This article explores various market entry strategies, their potential benefits, and considerations, supported by relevant examples and case studies. What is a market entry case? An overview of market entry cases, including different types of market entry cases, a framework for approaching the case and a full market entry case example. Developing a Market Entry Strategy for Your Business We will explore various market entry methods, the importance of identifying and understanding your target market, and the process of creating a strategic plan for successful entry. Real-world examples will be provided in the form of case studies to demonstrate the application of these strategies in practice. Market Entry Strategy for an Energy Company The project aimed to develop a comprehensive market entry strategy for the emerging sustainable fuel sector. It required an understanding of this evolving market, its various segments and potential routes for entry, and viable partnering opportunities. The "Where to play?" phase involved a thorough analysis of the upstream and downstream ... Market Entry Case Interview Preparation| PrepLounge.com Market Entry may be a great solution to apply in your Case Interview if your client is searching for growth alternatives. Learn how to work a Market Entry Case Market Entry & Exit: Articles, Research, & Case Studies on Market Entry Market Entry and Exit New research on market entry and exit from Harvard Business School faculty on issues including how to make your company a "cognitive referent," and why Tesco stumbled on entering the US market. Strategies for Market Entry and Business Expansion Introduction Expanding your business into new markets is a strategic move that can unlock global growth opportunities. In this comprehensive guide, we explore the strategies and tactics for successful market entry and business expansion. Whether you're eyeing international markets or seeking to broaden your domestic reach, our insights will help you navigate this transformative journey. PDF Case Studies on Market Entry Strategies Vol. I The assortment of 18 case studies across industries provides a better perspective about the various market-entry strategies and the rationale behind adopting those strategies given the socio-economic conditions and the business environment of the target country. How to crack market entry consulting cases? Market entry strategy frameworks can be used to crack consulting case interviews. We step through a market entry case study and provide an example solution. Case Interview Preparation: Market Entry Case EXPLAINED Either way, both questions follow the same structure in the beginning. The market entry framework used in this example covers a company characteristics analysis, industry analysis and an entry-mode vehicle selection. The ultimate guide to market entry The ultimate guide to market entry. Entering a new market can lead to a massive boost to sales, brand strength and long-term profits. But there's more to a market entry strategy than great products or services. Understanding the local market - its distribution channels, culture, economic and social trends - through a market research ... Case Studies On Market Entry Strategies The case studies featured in this book Case Studies on Market Entry Strategies - Vol. I highlight the market entry strategies of companies like - Wal-Mart, McDonald's, KFC, GM and UBS. Breaking Down the Market Study Framework To continue our series on case interview frameworks, we bring you our personal favorite - and the most versatile - the Market Study case interview framework. Market entry strategies in a high-tech successive generations market: a Purpose The purpose of this study is to explore market entry strategies in a high-tech successive generations (HTSGs) market, by investigating entry mode via entry timing and path differentiation and the performance outcomes of entry mode. Market Entry Strategy The goal of a market entry strategy is to enter a new market successfully and achieve sustainable growth. Market entry strategies can be either domestic or international. Domestic market entry ... Chinese Market Entry Strategies: Tips for Global Brands Chinese Market Entry Strategies. China has a robust digital economy and a huge customer base that is attractive to businesses and investors. Without well-planned market entry strategies, it could be tough for foreign brands to successfully penetrate and gain footing in a highly competitive market like the Chinese market. assignment essay homework paper phd report resume review speech thesis