How a Business Can Enter a New Market
Entrepreneurs and business owners have the fantastic ability to enter a new market when it becomes clear that the current one has reached its natural limits. A business can identify where it would most benefit from expanding to a new market by looking around and considering the market and the company’s strengths and weaknesses. This article will go through some of the considerations that must be made before launching a product or service into a new market.
1. Licensing
When it comes to inventing something new, a business can sell the idea to a company with the necessary experience and resources for manufacturing and marketing. This can be very lucrative, but it does mean that you may not get all the profit for your hard work. With this in mind, a business should consider how much money they can afford to forgo to make their new product or service a reality.
2. Joint Venture
According to former arbitrage trader Helen Lee Schifter, the best way for a business to enter a new market is by forming a joint venture. This is where the industry creates an alliance with another company that has already entered the market and then sells them the right to do what they do best. Doing this can use someone else’s resources and experience to help their product or service succeed.
3. Piggybacking
This involves entering a new market without having a different product or service to offer. Instead, the business uses the popularity of an existing product to make its product/services more desirable. This is done by creating a better promotion for the original product, getting a celebrity endorsement, or using more effective marketing advertising. Then this new business will get some of the increased sales that are made.
4. Direct Sales
Direct sale is a method for selling products or services directly to consumers instead of working through agents or retailers. The good news is that the business can work from home or anywhere with an internet connection. Helen Lee Schifter states that this can result in a much higher profit margin because of the more affordable prices.
5. Purchasing Product/Services From Another Business
This is where a business buys products or services from another firm to resell to its customers. The business does this by working out an agreement with the other company and then agreeing to pay them back for the cost of developing their product or service in return for 50% of total sales made.
6. Franchising
This is where a business allows another company to use its brand name and trademark and then sell products or services under that trade name. This can be a good way of extending your brand’s reach since you can expand into a large market with only one investment.
7. Going Public
When a business decides to go public, they also decide to implement expansion plans. A public company is like an initial holding company that helps the business raise capital, establish strategic relationships, and gain extra publicity for its brand. Going public means that investors will be able to buy company shares and profit from their investments through stock dividends or stock options on future sales.
By understanding the potential new market and considering the company’s strengths and weaknesses, a business owner or entrepreneur can make informed decisions about which direction is best for their company.
