Market Entry Strategies

Market Entry Strategies

The marketer can make use of market entry strategies by investing in promotions or making widespread entre through low prices, and skimming strategies where the short-term gain is the objective with a high entre price.

For services, the marketer is more capable of moving in at high speed than the goods marketer, as he does not have to grapple with such problems of production, inventory, storage, and logistics.

The marketer can choose from any of the given four market entry alternatives:

Rapid Skimming Strategy

It is an expensive initiative combining high price and high promotion, directed at a low aware, low willingness-to-buy market. This strategy is very useful if the market size and potential are very high and the likelihood of the competition quickly adopting and adapting to the offer is also very high.

When a firm has a short-term goal of profit maximization and increases in sales volume, it can resort to this strategy. The target markets are the Early Adopters and Innovators who do not mind paying the high price for the privilege of being early users.

Example: The early entrants in the cell phone service operations like BPL Mobile, Max Touch/ Orange/Hutch, RPG Cellular, etc., followed this strategy

Slow Skimming Strategy

This strategy is used when the firm is confident that it can recoup its investments in sufficient time. This could be due to lack of competition (public sector undertakings, infrastructure services like airlines, telecommunication, etc., are some examples), the requirement of heavy investments in technology and systems to compete, etc.

The target market, mostly business and industrial users pay for the high price as the product is exclusive and vital for their competitiveness. Five-star hotels and Enterprise Resource Planning (ERP) and Supply Chain Management (SCM) System providers like SAP, Baan, i2, Mindtree Consulting, etc., used this strategy.

Rapid Penetration Strategy

If the firm has a long-term objective of being a market leader, market share, and profit maximization, and if there exist entry barriers like intensive competition, then this strategy is useful. ICICI Bank as also Korean firms like Samsung and LG entered India with their dreaded retailing, using a rapid penetration strategy.

The price of their offers is lower but there is high visibility in the media. Big Bazar, the discounter major has successfully used this strategy to make its mark.

Slow Penetration Strategy

When the market size is large, well aware of the products and services offered, and sensitive to price but the competitive threats are almost non-existent, this strategy is used. The long-term objective of the firm is to maximize sales or profits.

Speed to Market

ICICI Bank made waves by moving in very fast with its retail banking products. So did the grocery chain of cooperatives in the superstore format Apna Bazar. A slow entry would enable the competitors to bring out “me too” products and quite possibly grab a large market share.

With the capability to move in quickly, the service marketer can considerably reduce the lead time between product conception/incubation and product introduction. This is known as the marketer’s and/or their product’s “speed to market” factor.

A necessary system for the marketer to speedily consolidate his entry includes information integration, cohesiveness, and synchronization of all management functions.

  • Tapan K Panda, Marketing Management, Excel Books.

  • Philip Kotler, Marketing Management, Pearson, 2007.

  • V S Ramaswami and S Namakumari, Marketing Management, Macmillan, 2003

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