How you enter your new market will be determined by the nature of your product and/or service, and the conditions and requirements of your chosen market segment and location.
When you sell directly to end users, you eliminate the middlemen, making it easier to customise your market entry strategy to reflect the market conditions you may face. Sales can be made directly between you and end users, or they can be made through local sales representatives who promote your product and/or service – without taking ownership. You can use a distributor to sell your products directly to buyers.
When you sell directly to end users, you'll be responsible for:
- market research
- warehousing and delivery of your product and/or service
- customer and after-sales service
- sales order, and billing.
When you sell indirectly to end users, exports are not handled directly by the manufacturer or producer, but through intermediaries such as agents, export management and trading companies.
In most cases, the exporting process is simplified and export management companies usually:
- provide market information
- appoint sales representatives in the importing country
- devise promotional strategies
- organise shipping
- export documentation
Export trading companies usually provide support services such as distribution, warehousing, shipping, billing and insurance.
A countertrade is a form of exporting where goods and services are paid for in full, or in part, with other goods and services.
There are different approaches to selling online, including:
- Setting up your own website in the export destination country which incorporates an online store – Business-to-Consumer.
- Selling your product wholesale to major e-commerce sites, which will then manage the marketing, sales and distribution to customers – Business-to-Business.
- Setting up an online store within a major e-commerce site – Business-to-Consumer.
- Selling your product through a third party store, known as an online supermarket – Business-to-Business-to-Consumer.
Contractual entry modes
Licensing allows an individual or a company that owns intangible property (such as copyright or a trademark) to grant another party the right to use that property for a specified period of time, and under specified conditions. Payment is received in the form of royalties.
|Can reduce risk and be an effective way to finance international expansion.|
Check if your licensing agreement will restrict any future activities, or reveal information to a possible future competitor.
Franchising is when the owner of the business providing a product and/or service (the franchisor) assigns to independent people (the franchisees) the right to market and distribute the franchisor's products and/or service, and to use the business name for a specified period of time, and under specified conditions.
|It's a low-cost, low-risk mode of entry into new markets allowing you to use the cultural knowledge and know-how of local managers.||As a franchisor, you're obliged to continue to support the franchisee after the initial one-time transfer of property is complete.|
Investment entry modes
A joint venture is when a separate company is created, and jointly owned by two or more independent entities to achieve an objective.
|Can be a good way to penetrate international markets while reducing risk.||There's always the possibility of conflict between partners, and potential loss of control by one of the parties.|
|Can allow you to access the international distribution network of the entities you've partnered with.|
A strategic alliance is when two or more entities cooperate to achieve a strategic goal. Depending on the goals, alliances can be formed between a company and its suppliers, customers – or even its competitors in some instances – for short, medium or long periods.
|You can share costs and utilise member strengths.||There's risk of conflict between partners – not to mention the creation of a future local, or international competitor.|
Wholly owned subsidiaries
A wholly owned subsidiary is a company that is completely owned and controlled by a single parent company.
|You have complete control over the day-to-day operations in markets overseas, while at the same time acquiring valuable processes and technologies.||It requires substantial resources, so the exposure to risk is high.|
Market entry strategy training programs
Discover how our Access Program can provide assistance for Melbourne and Victorian businesses planning to establish new export markets in key countries and regions.
Register with Asialink Business to participate in their Asia Market Entry Strategy Training Program.