Market Entry And Competition A Discussion Of Strategies Available To Entrepreneurs

1585 words - 6 pages

Market-Entry and CompetitionA Discussion of Strategies available to Entrepreneursby Kai F. Mahnert, DBMKConducted for Ivan Mc Phillips, Lecturer in Enterprise Development, GMITMarket-Entry StrategyMarket-entry strategy is the way the entrepreneur proposes to enter the market s/he has chosen for the new venture, be it an existing market or a completely new one (i.e. a new market for an existing product or a new product in the general market). Generally, all the activities involving the successful establishment of the new venture within the chosen market are co-ordinated and adapted to the market-entry strategy. The main activities concerned are:1)Resources2)Capital Investment and Scale Requirements3)Product Life Cycle4)Proprietary Protection5)Market Structure and CompetitionIn particular the latter three points are of both obvious importance and uncertainty in the case of a newly developed product, especially if it is a stand-alone product (or service) that has never existed in this or a similar form before. Here, forecasts by the entrepreneur have to be made solely on the grounds of personal estimation, as no precedent or guideline is available.As regards the strategies themselves, they seem to correspond to a certain extent with the distinction made above. Depending on the type and size of market the entrepreneur wishes to target (which to an extent depends on the product or service offered by the new venture), s/he can employ a 'Niche' or 'Broad' Market-entry strategy.Using a niche market-entry strategy is usually associated with some kind of geographical limitation facing the entrepreneur. At start-up, only few new ventures will be able to serve a market larger than the immediate geographical area the business is located in. In most cases, the business will start-up in the physical location of the targeted market segment, i.e. a new small business selling school stationary and similar products would seek a location in the proximity of a suburban school, preferably away from the city centre or large shopping centres, while a newly established commercial courier service would be more likely to set up near or in an industrial estate, where such business is more easily obtained.The advantages and disadvantages of this kind of strategy lie in the same area - money and customers. While it will cost considerably less to introduce the business, with a limited amount of potential customers at hand (here, in particular, the importance of pre-start-up advertising can be seen), the never-the-less high costs of start-up may not be recovered due to the client base being too small. Thus, a 'bootstrapping' start-up pattern can be observed in many of these businesses.A broad market-entry strategy requires a much larger amount of capital investment and resources, making it less attainable to most prospective entrepreneurs. The major advantage of a broad market-entry is the start-up size of the business. With a large market and established distribution channels,...

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