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Your Guide to Market Entry Strategy

Entering new markets can be an exciting time for start-ups to name brands. A clearly defined market entry strategy — including the business model, localization needs, and marketing frameworks — can give you a solid landing in a foreign market.

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Only one in seven people around the world speak English as their primary language.

Lost in the excitement of international expansion, many teams often forget this fact.

With the majority of the world’s consumers residing outside of the US, and with English comprising a small percentage of those consumers, it’s become imperative for companies with global aspirations to understand the importance and impact of translating your content and products into other languages.

Achieving the strategic growth you seek and winning in your global market requires an effective translation strategy, an efficient localization process, and thoughtful execution of a market entry strategy to keep your business ahead of the competition.

Let’s walk through the different elements of a market entry strategy so you can grow with confidence.

What is a market entry strategy?

Market entry strategy refers to the sales and marketing framework businesses use as they expand internationally. It focuses on how you’ll increase product awareness in a new region, what technology and resources you need to distribute your products, and what language translation services make that happen.

Market entry strategies provide a framework to address:

  • International trade agreements, tariffs, and barriers for physical products
  • Understanding government regulations and legal requirements when operating in a new country
  • Pricing and willingness-to-pay from target markets
  • Supply chain and manufacturing
  • Handling global and local competition
  • Localized messaging and positioning

Defining your go-to-market business model and prioritizing your content is a solid first step to thinking with a global mindset.

Why do companies decide to enter a foreign market?

Before we get too far into talking about what market entry strategies look like, it’s essential to step back and ask why.

International expansion takes significant work and resources—not only to physically expand your commercial footprint but also to hire new staff, localize your product and content, and leverage new technology.

So, why do it?

For companies obsessed with growth, expanding to new markets (whether domestically, for new products, or foreign, for a new audience) makes logical sense. Often, it’s because international expansion can offer:

  • Better profit margins: The larger companies grow, the more likely they can harness economies of scale. For example, the cost for $93-billion giant Walmart to open a new store is negligible compared to their bottom line. But the cost for a mom-and-pop shop to expand to a second store can be prohibitive. The more you grow, the easier it is to keep growing.
  • Less competition: First-mover advantage can matter in a foreign country, especially if the competition is fierce in your domestic market yet no competitors exist in another. How you bring a new category or product to a market can define it forever, the way many people refer to tissues as Kleenex regardless of brand.
  • Playgrounds for innovation: New markets mean new ideas. While we like to think of innovation as a quality inherent to a given company, the reality is that market forces usually spur innovation, not the other way around. Even creative juggernaut Disney tests rides, parades, and policies at Disneyland Shanghai before bringing them back to the United States.
  • New talent: Expanding your business internationally unlocks a global talent pool that brings new energy, ideas, and expertise, especially as you navigate different cultures.
  • Choosing the right international market entry framework

    Once you’ve determined the right time to enter a market, the next question is how. These are the five most common market entry models:

Exporting

Exporting follows two primary models, 1) direct exporting and 2) indirect exporting through a third-party reseller or distributor. This is often the first route companies will take as it allows you to enter many markets simultaneously but can be challenging to scale without hiring in-country resources.

Licensing

This involves transferring the rights and intellectual property from one company to another, using a local partner (the licensee) to create and distribute your product. Often, this means giving up some measure of control of quality, marketing, and brand, but it can be an extremely efficient way to access a new market. Licensing is why you can purchase t-shirts with Bugs Bunny or Mickey Mouse on them anywhere in the world.

Franchising

Franchising involves bringing in an outside company (known as the franchisee) to run additional locations for a fee. One of the fastest market entry strategies (and common for fast-food companies like McDonald’s) franchising involves distributing the entire process and brand materials, with corporate assistance and directives on everything from marketing slogans to site selection and permitting.

Partnering and Joint Ventures

Partnerships and joint ventures tend to be less formal and cohesive, depending on the nature of the alliance. It can be as simple as a co-marketing agreement (you promote our products, I’ll promote yours) or as complex as manufacturing and sub-contracting for supply chain management. Joint ventures formalize a partnership to create a brand new company that operates in the new market.

Mergers and acquisitions

A more aggressive model, mergers and acquisitions take over a competitor operating in a given market to reap the benefits. They are often used as a shortcut to accessing the competitive advantage from a local firm, using their resources, knowledge, and talent to enter a market seamlessly.

Greenfield Investments

This is the most challenging of the market entry strategies but the most rewarding in the long run. This strategy essentially re-starts the company from the ground up in a new market, building and operating new facilities and headquarters.

5 market entry strategy examples with international markets

No two market strategies are exactly alike. Take these five successful market entry examples from top-notch multinational companies:

  1. Vitamix: The blender and home appliances company’s go-to-market strategy is twofold: first, they work with distributors worldwide who sell Vitamix products in the market; second, they sell directly to consumers online in specific markets, like the United States and Canada. Today, Vitamix uses Smartling's Global Delivery Network and language translation services to provide content and product experiences for users anywhere. They also sold out one of their new products around the world in less than 24 hours.
  2. Aflac: The insurance provider is more popular in Japan than in the United States, entering the market in 1974. Today, they boast more than 50 million Japanese customers, making them one of the more successful APAC expansions in American corporate history.
  3. Apple: The tech giant operates in more than 25 countries but has used various market entry strategies based on the target market. Their India strategy, for example, is three-fold: customized online retail options, budget-versions of their most popular products to capture more market share, and a subscription bundle that includes Apple Music, Apple TV, and Apple Arcade.
  4. Nivea: The skincare company creates completely different user experiences based on the market. The products promoted differently in each locale due to product preferences in those markets, and the models used in the imagery reflect the local buyers in different regions. Also, the Nivea websites for right-to-left languages, like Hebrew and Arabic, look just as native as the left-to-right languages (French, German, English, etc). In other words, all localized versions of the website feel native for that specific locale and market.
  5. Red Bull: The adrenaline-fueled beverage company is so much a part of American culture that few people realize it’s not American at all. The Austrian company targeted specific American market segments that best aligned with their brand, sponsoring extreme sports competitions, NASCAR, and experimenting with video and social media early on that took them to the top.

With Smartling, you can enter a new market with ease

What do these models have in common? A robust localization strategy.

Expanding into international markets isn’t just about purchasing manufacturing facilities or signing licensing agreements.

You need to understand each market to win—the cultural nuances that make your product or service indispensable to your target audience there. 94% of consumers discontinue brand relationships if messaging is off base, so the margin between a click or an unsubscribe is razor-thin when a brand misses its mark.

When deciding where to buy, 56% of e-commerce customers say having a website in their language is more vital than price. Investigating the proper processes for efficient translation, researching ways to automate those efforts, and building the right team for your business are other important factors before you even begin translating your first ‘Hello, World!’

You may choose different market entry strategies as you explore other markets. Part of what makes brands like the five examples above successful is that they don’t try to make a one-size-fits-all approach.

A deep understanding of your end-users, what they care about, and what resonates with them can be the difference between winning and losing, even if you have a solid franchising or joint venture model. That’s where localization can make a difference.

See how Smartling can help.