Some companies will need to think about entering new markets. The response to COVID19 has transformed the business landscape for many, causing trading difficulties. In some cases this may be short term but in others it may prove to be long term, or a permanent change. Economists call this the scarring of the economy. Consequently, some technology businesses will want to enter new market areas to repair the damage caused by the virus and the lockdowns around the world.
Naturally PR and promotional activities will be part of this marketing activity, but they may not be enough on their own. This blog looks at some simple, strategic approaches for entering new markets. Each of the five approaches here are strategies I have seen being used by software and technology vendors. They could work for companies selling application software or cloud-based IT services for business, or any other high value technology product that is sold in a similar way.
Entering new markets
Companies in business-to-business sectors tend to view markets as verticals, for example: retail, local government, or manufacturing. If a business has always worked in one defined vertical or just a few, it can be difficult to enter a totally new area. This is often because the customers’ needs and culture are different, even if the product or service is potentially valuable to them.
Entering a new market requires a marketing strategy that will create a brand presence, bring sales enquiries, and a plan to win orders. The challenge is twofold. The buyers in the new sector will not know the business or its brand, but equally the business may not understand what the new buyers are looking for, or how they reach their purchasing decisions.
Getting the first customer in a new market is the greatest challenge. Here are five entry strategies that a business might use to move into a new sector where it has no previous contracts or contacts.
A Sales Hire
This is a relatively simple strategy, to hire a sales manager who is already working in the industry. He or she will bring inside knowledge and contacts which will open doors and speed up the process. It may not be enough on its own though. This will be a tough period of new business development and the company should also plan a marketing campaign to support its effort. When trade shows are functioning again, exhibiting at a show for that industry is relatively simple and could be a good way forward.
Collaboration
A customer collaboration can be an effective market entry strategy. It involves a collaboration with one customer who agrees to provide input into product design and testing. This provides a proven solution and a first customer in one go. This route is a popular one in the software industry. Success depends upon finding a forward-thinking customer who wants to build a better solution for their industry. Then the project becomes a joint development. The customer will expect to be compensated for the time and effort they are investing, so they may receive their own system at no financial cost.
Partnership
A partnership approach is a little similar. With this approach the other party is not a customer but a supplier or service provider. Importantly they already operate in the new market. There should be synergy between the work of the two partners so that they can approach the market effectively together. They will probably work together on systems integration and marketing. In some cases the product or service may be “white-labelled”, i.e. it will be sold under the other company’s brand.
Acquisition
Buying a company is the probably the easiest and most certain way to enter a new market. It is also the most expensive. This strategy is simply to buy a business that is already trading in the new area. However this requires an investment from company reserves or capital raised. There will also be a detailed process of due diligence which will be beyond the usual remit of the sales and marketing functions.
Capability, credibility and PR
Finally, it may be possible to enter a new market sector just by mounting a marketing campaign. This campaign will need to demonstrate capability and build credibility in the new market. It might involve a PR splash linked to a digital marketing campaign and supporting information on the company’s website.
Companies typically use white papers and case studies as content to support this kind of campaign.
To conclude, entering new markets is not easy, and will always require some degree of investment of resources and effort. Each of the five routes outlined above involves some cost and the CMO or director responsible for marketing will need to determine how best to move forward. It may be that a combination of two or more of these strategies will work well together.
If you found this article useful, click below to read more: