DIRECT EXPORTING AND FRANCHISING IN MARKET ENTRY

1.Direct Exporting

Direct exporting is selling directly into the market you have chosen using in the first instance you own resources. Many companies, once they have established a sales program turn to agents and/or distributors to represent them further in that market. Agents and distributors work closely with you in representing your interests. They become the face of your company and thus it is important that your choice of agents and distributors is handled in much the same way you would hire a key staff person.

2. Franchising

Franchising is a typical North American process for rapid market expansion but it is gaining traction in other parts of the world. Franchising works well for firms that have a repeatable business model (eg. food outlets) that can be easily transferred into other markets. Two caveats are required when considering using the franchise model. The first is that your business model should either be very unique or have strong brand recognition that can be utilized internationally and secondly you may be creating your future competition in your franchisee.

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MARKET ENTRY STRATEGIES

MARKET ENTRY STRATEGIES

There are a variety of ways in which a company can enter a foreign market. No one market entry strategy works for all international markets. Direct exporting may be the most appropriate strategy in one market while in another you may need to set up a joint venture and in another you may well license your manufacturing. There will be a number of factors that will influence your choice of strategy, including, but not limited to, tariff rates, the degree of adaptation of your product required, marketing and transportation costs. While these factors may well increase your costs it is expected the increase in sales will offset these costs. The following strategies are the main entry options open to you.

-Direct Exporting

-Licensing

-Franchising

-Partnering

-Joint Ventures

-Buying a Company

-Piggybacking

-Turnkey Projects

-Greenfield Investments

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RESEARCH YOUR MARKET

Test your business idea with potential customers to check if there’s real demand for what you’re planning to sell. This lets you find out about any problems and fix them before you’ve wasted too much time, effort and money.

Identify potential customers. Talk to them and find out about their needs.

If you can, make a basic version of your product or service. Work out the cheapest and quickest way of making something that lets you find out if you’re meeting a real customer need.

Test it with them and get feedback. Find out what they’d be willing to pay for it. Try out different prices with different customers in a consistent, realistic way to see what people will really pay. Can you make enough money for a return on your investment?

If there are other businesses competing for your market, think about what will make you different. Can you provide something better than what’s already available?

Example:

If you’re in retail you could try different opening hours or home delivery. You could aim for a specific group of customers who aren’t being targeted by other businesses (a ‘market niche’), make something that’s easier to use than competitors’ products, or meet a customer need by solving a problem that nobody’s ever solved before.

If you’re starting a retail business, think about testing your idea by taking a short-term lease on premises for a few weeks or months.

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