Unveiling the Secrets to Successful Market Entry: Tailored Strategies for Businesses Big and Small
Business and all it entails is an ever-changing, dynamic landscape, so deciding the optimal time and strategy for market entry is critical for corporate giants and brand-new startups alike. The topic of market entry strategy is vast. Still, this article will provide an introduction that delves into the intricacies of market entry strategies, comparing the approaches of being first to market (first mover) versus a later entry and how those strategies unfold differently for big and small businesses.
The First Mover Advantage: A Double-Edged Sword
How often do you hear tales of the first to market, i.e. the first mover, swoops in and sets the market standards, rapidly grows their brand awareness to achieve dominance, and secures all the best resources, leaving everyone else virtually unable to compete? You only have to think of Amazon’s early foray into the e-commerce world or, more recently, Tesla’s big bet on electric vehicles to see this in action. Both cases exemplify market dominance, technological leadership, and innovation.
It’s not all sunshine and roses; this path is fraught with risk. There is no path to follow when you are blazing the trail. You have issues like high initial research and development costs, navigating an extremely uncertain and shaky market, and the danger of obsolescence due to innovations from your competitors and further afield. Becoming obsolete after a huge initial investment is a very scary situation to find yourself in, which can lead to issues like the sunk cost fallacy.
Later Entrants: Learning and Leveraging
Later entrants to the market get to capitalise on the work already done by the first movers. They have observed the first movers to see their triumphs and failures, enabling them to move quickly to market without facing some of the stumbling blocks the first movers had to overcome. Google is one of the more well-known examples of this. Their success in the search engine market was partly due to their ability to build upon what came before. They looked around them in the market and saw what worked and didn’t and how they could differentiate & innovate.
There is a trade-off when you invoke any strategy, and in this case, the trade-off is a different set of challenges like market saturation and high entry barriers set by existing players in the market. As hurdles go, these are not insignificant.
Big vs. Small Businesses: Diverse Strategies in Market Entry
Size does matter– there, I said it. Strategies play out differently for big versus small players in the market. If you are a small business owner looking toward corporate behemoths like Apple, P&G, or Alphabet, serves little purpose. Likewise, if you are the CEO of a transnational corporate entity, there is little value to be gained from assessing the strategies of small businesses. The larger the gap between businesses, the more pronounced the differences in market entry strategy become.
Big business can deploy vast resources to a project, utilise their significant existing brand recognition, and has extensive research & development capabilities. This combination of assets and attributes makes, in most instances, big business well-suited for the first-mover strategy. With that being said, the size and scope of these corporate giants impede agility and the ability to respond rapidly to changes in the market.
On the other side of this equation, we have small businesses. Small businesses thrive in an agile and dynamic landscape thanks to their low levels of process overhead. They (small businesses) are generally quite adept at identifying niche markets and, as later entrants to the market, can adapt quickly and with minimal friction, thanks to being able to learn from the playbook set out by the first movers. Small businesses’ limited resources and lower brand recognition are limiting factors that usually prevent them from entering the market as first movers.
Market Entry Strategic Execution: The Key to Success
Whether a company decides to employ the first mover strategy or be a late entrant to the market, the key to succeeding with any strategy is how strategically the business executes its chosen plan.
With their immense resources, larger businesses are much better suited to be first movers than small businesses. These larger businesses can deploy their resources but should also consider streamlining some of their processes to improve their ability to react in a timely fashion to change in the market. Small businesses are usually better suited to the fast-follow/late-entrant strategy. Smaller businesses should absolutely capitalise on their inherent agility to get the job done. Still, they should also figure out how to make the entire process as cost-effective as possible because, unlike their large counterparts, they cannot access large pools of resources. However, that is not always the case. As with anything, there is no single defined way to do it. Experimentation is required to truly understand what is going to be the most effective strategy for your business.
The decision on when to enter a market is complex and is influenced by many internal and external factors. Things like company size, the prevailing market conditions, and the nuances of the industry the business operates in and the complementary industries. Both strategies have their own set of advantages and disadvantages. In the end, success with either strategy is contingent on effectively implementing and adapting these strategies within the constantly shifting market landscape. Regardless of size and scope, a business must comprehend the dynamics of the market and the customer’s needs while leveraging its unique skills and strengths to achieve sustainable growth and a successful market entry.