Thread by @Subhabrata17

Entering a new market is always challenging as well as risky. Most of the time organizations fail in capturing sizable market share after entering in new market. Based on feedback from team on ground, get in to price war with entrenched competitors. (1/n)
@Levers4Change

When not able to make significant gain in sales, slowly gets out of market. Market landscape is full of such examples. But where do companies fail? Is it Strategy or is it model of approach or is it productivity of the team or ground or combination of all? (2/n) @Levers4Change

While entering a new market or devising Go To Market strategy, organizations should consider Porter’s five forces model- All the five forces described in Porter’s five forces model should guide the organization in devising the strategy. (3/n)

I have the first-hand experience of devising a strategy for a company to enter in to a new market, capture market share and sustain and increase the sales and implement the strategy on the ground. (4/n)

As the company has already captured more than 60% of the market share in existing market, it has become more of a necessary than luxury for it to venture in to new markets to expand its reach and become a Pan India company. (5/n)
@Levers4Change

Its required to understand whether new market is fairly large & customers are ready to pay premium for good quality product or not. Then based on Market Operating Price (MOP) it must be decided whether market is suitable for product and company or not. (6/n) @Levers4Change

For company for which I was working, we did a survey in which we covered 4 districts, 114 local markets, 95 villages. In these, we have conducted 602 meetings, met 40 distributors, 244 dealers and 172 farmers to gauge the market sentiment (7/n) @Levers4Change

After doing all these extensive researches, we came up with the MECE (Mutually Exclusive Collectively Exhaustive) list of problem statements which the company was going to face while entering the new market. (8/n)

The bigger question to answer before answering the problem statements was even if the market is large and attractive enough, was there place for another player to enter? (9/n) @Levers4Change

Market leader was a local player with 35% market share but 2nd & 3rd position was assorted mix of national and local players having 30% market share. Any player with good product quality & strong infrastructure and easily take 25-30% market share from 2nd and 3rd position (10/n)

Additional freight cost from the Manufacturing Location to the Consumption Market:Logistics cost increases due to unavailability of return load for transporter. We utilized closed containers who had come for 2 wheeler delivery. So, logistics per piece had come down (11/n)

Also, organizations can understand value proposition & services offered by new age technology start-ups in Logistics. Locating the start-ups and devising the strategy for minimizing logistics cost without hampering the service quality can be explored with these companies. (12/n)

Quality Requirement of Product:Sometimes product available with the organization is not the quality the consumer demands, even if it is of superior quality. So, company cannot charge more price for a product of superior quality if the customer requirement is not of that. (13/n)

For example, Montecarlo sweater in Europe cannot be sold in India even though the quality is top notch. The requirement in India is different and that does not mean that Montecarlo provides inferior quality product. It’s what the customer wants. (14/n) @Levers4Change

The product available for company though of superior quality & higher price was not product required by customer. So, R&D team of the company, took it on and came up with a new product in the same category catering to the need of the customer with competitive pricing. (15/n)

So, for a company entering into new market, it’s very important to understand the need of the customer and customize your product as per the requirement. As the saying goes, “Customer is the king” and you must understand the requirement of the king. (16/n)

How to service the entire market and interior markets:
Serviceability is largest factor in market for market leader to maintain its position. So, what’s the right model to adopt when enter in to a new market? (17/n)

Dealer based model serviced or distributor-based model? It depends on maturity of market. If company well entrenched in market, can go for dealer-based model risk of credit is limited. But if company is new distributor-based model is right risk of credit loss is very high. (18/n)

In this case, prevalent model was dealer based model in market serviced by depots operated by companies and it’s a matter of pride for the dealers that they are directly dealing with companies rather than with a distributor. (19/n)

So, we went ahead with dealer-based model, dealers at each trading market being serviced by depot being operated by company. This helped company in being able to supply material to dealers in committed 8 hours & were at par in terms of serviceability with market leader. (20/n)

How to counter dominance of local and national players already entrenched in market:There is always going to be a market leader who has significant market share. In such scenario, we identified trading markets which are contributing to 80% of total potential-Pareto Rule (21/n)

Understand the strategy of dominant player in that market. Whether he has exclusive dealer or open market, whether he is associated with the top 1 or 2 dealer or not, what is the dealer engagement and customer engagement approach the competitor is taking etc. (22/n)

Based on this understanding, we approached those markets & approached top 1,2,3 dealers for our product. To give confidence to dealer, we also undertook Focused Customer Conversion program along with various market making activities for creating brand awareness. (23/n)

As the product quality was superior, we had the advantage over our competitors. So by addressing the MECE list of hurdles, the company has not only successfully entered the market, also captured significant market share in the first year and bettered in the 2nd year. (24/n)

Porter’s 5 forces model with robust distribution model understanding requirement of customers & addressing them & careful yet ambitious market making customer conversion plan should help organization in entering a new market & capture good market share with margin (25/n)