Flevy Management Insights Q&A
What strategies can businesses employ to overcome initial resistance in a new market?
     David Tang    |    Market Entry


This article provides a detailed response to: What strategies can businesses employ to overcome initial resistance in a new market? For a comprehensive understanding of Market Entry, we also include relevant case studies for further reading and links to Market Entry best practice resources.

TLDR Businesses can overcome initial market resistance through thorough Market Research, Strategic Partnerships, and adapting products or services to local needs, ensuring compliance and leveraging local insights for success.

Reading time: 5 minutes

Before we begin, let's review some important management concepts, as they related to this question.

What does Market Research and Local Insights mean?
What does Strategic Partnerships and Local Collaboration mean?
What does Adaptation and Innovation mean?


Entering a new market is fraught with challenges, from understanding local consumer behavior to navigating regulatory landscapes. However, with the right strategies, businesses can overcome initial resistance and establish a strong market presence. These strategies are grounded in thorough market research, strategic planning, and agile execution.

Market Research and Local Insights

One of the first steps in overcoming market resistance is conducting deep market research to understand the local consumer behavior, preferences, and needs. This involves collecting and analyzing data on local competitors, regulatory requirements, and potential barriers to entry. According to McKinsey & Company, companies that invest in comprehensive market research can tailor their product offerings to better meet local needs, significantly increasing their chances of success. For example, McDonald's adapts its menu in different countries to cater to local tastes, offering vegetarian burgers in India and green tea flavored desserts in Japan. This approach not only helps in overcoming initial resistance but also builds a loyal customer base by respecting and integrating into the local culture.

Furthermore, understanding the competitive landscape is crucial. Businesses should analyze their competitors' strengths and weaknesses, market position, and customer base. This information can help in identifying gaps in the market that the business can fill, offering a competitive advantage. For instance, when Airbnb entered the Chinese market, it faced stiff competition from local players like Tujia and Xiaozhu. By focusing on offering unique experiences and superior customer service, Airbnb was able to differentiate itself and gain a foothold in the market.

Lastly, regulatory compliance cannot be overlooked. Each market has its own set of laws and regulations that businesses must adhere to. Failure to comply can result in fines, legal issues, and a damaged reputation. Companies should invest in legal advice and compliance checks to ensure all operations are above board. For example, when Uber entered the European market, it faced significant resistance due to non-compliance with local transportation laws, leading to bans in several cities. Learning from these mistakes, Uber has since made efforts to work within regulatory frameworks, improving its relationship with local governments.

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Strategic Partnerships and Local Collaboration

Forming strategic partnerships with local businesses can be a powerful strategy to overcome market resistance. These partnerships can provide valuable local knowledge, distribution networks, and credibility. According to a report by Bain & Company, companies that form strategic partnerships when entering new markets can reduce the risk of failure by leveraging their partners' established presence and reputation. A notable example is Starbucks' partnership with Tata Global Beverages in India, which helped Starbucks understand the local market and consumer preferences, leading to a successful market entry.

Local collaborations can also extend to marketing efforts. Collaborating with local influencers, celebrities, or community leaders can help in building brand awareness and trust among the local population. For example, when entering the South Korean market, Netflix collaborated with local creators to produce Korea-specific content, which resonated well with the local audience and helped Netflix establish a strong presence in the country.

Moreover, hiring local talent is another aspect of local collaboration. Local employees bring invaluable insights into the consumer mindset and can navigate cultural nuances more effectively. They can also play a crucial role in building relationships with local suppliers, government agencies, and other stakeholders. For instance, when IKEA entered the Indian market, it hired a significant number of local employees, which helped in understanding and catering to local tastes and preferences.

Adaptation and Innovation

Adapting products or services to meet local needs is crucial for overcoming initial market resistance. This may involve modifying product features, packaging, pricing, or even the business model to better align with local expectations and preferences. According to a study by Accenture, companies that are willing to adapt their offerings based on local insights are more likely to succeed in new markets. For example, KFC has found success in China by adapting its menu to include local favorites such as congee and rice dishes, alongside its traditional fried chicken.

Innovation is also key to differentiating a business in a new market. This could involve introducing new technologies, business models, or customer experiences that set the company apart from local competitors. For example, DiDi Chuxing's success in the Chinese ride-hailing market can be attributed to its innovative features like real-time traffic monitoring and AI-based dispatch systems, which improved the customer experience and efficiency.

Finally, businesses must be prepared to iterate and evolve their strategies based on market feedback. This requires a flexible approach and a willingness to make changes based on what is working and what is not. Continuous improvement and adaptation are essential for long-term success in any market. For instance, Amazon's continuous adaptation and innovation in logistics and customer service have helped it dominate various markets around the globe.

Entering a new market is never easy, but by employing strategies such as thorough market research, forming strategic partnerships, and adapting to local needs, businesses can overcome initial resistance and achieve success.

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Market Entry Case Studies

For a practical understanding of Market Entry, take a look at these case studies.

Market Entry Strategy for Boutique Cosmetics Brand

Scenario: A firm in the boutique cosmetics industry seeks to expand its footprint into a new international market.

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Market Entry Strategy Development for Growing Technology Firm

Scenario: A software firm located in North America has recently developed a ground-breaking technology solution.

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Market Entry Strategy for Industrial 3D Printing Firm

Scenario: The organization is a mid-sized industrial 3D printing company based in North America, seeking to expand its operations into the European market.

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Organic Beverage Market Entry Strategy for Asia-Pacific

Scenario: The company is a mid-sized organic beverage producer based in North America, looking to expand into the Asia-Pacific region.

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Scenario: A leading building materials company is exploring the opportunity to enter the African market.

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Scenario: An established telecom company is seeking to enter the digital services market to capitalize on emerging technologies and evolving consumer demands.

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Related Questions

Here are our additional questions you may be interested in.

How is the rise of blockchain technology influencing market entry strategies in the financial sector?
The rise of blockchain technology is reshaping market entry strategies in the financial sector by necessitating its integration into Strategic Planning, Operational Excellence, and Innovation, thereby enabling companies to enhance efficiency, security, and transparency in financial transactions, and create competitive and differentiated offerings in a rapidly evolving regulatory and technological landscape. [Read full explanation]
In what ways can artificial intelligence (AI) and machine learning (ML) optimize market analysis for entry strategies?
AI and ML revolutionize market entry strategies by enhancing Competitive Intelligence, improving Market Demand Forecasting, and optimizing Marketing Strategies, leading to informed decisions and competitive advantages. [Read full explanation]
How can companies leverage local partnerships for successful market entry?
Leveraging local partnerships aids in Strategic Alignment, Operational Excellence, and building brand trust for successful market entry. [Read full explanation]
How do consumer privacy concerns shape digital market entry strategies?
Consumer privacy concerns necessitate integrating privacy into Strategic Planning, ensuring Regulatory Compliance, investing in Technology, and building Trust through transparency for successful Digital Market Entry. [Read full explanation]
How are changes in global trade policies affecting market entry strategies?
Global trade policy changes are reshaping Market Entry Strategies, necessitating Strategic Planning, Risk Management, and the use of Digital Transformation and partnerships to adapt and thrive. [Read full explanation]
How is the shift towards remote work influencing market entry decisions for technology firms?
The shift towards remote work is reshaping technology firms' market entry strategies by altering customer needs, product development, Strategic Planning, and necessitating Operational Excellence in support and infrastructure for distributed teams and markets. [Read full explanation]

 
David Tang, New York

Strategy & Operations, Digital Transformation, Management Consulting

This Q&A article was reviewed by David Tang. David is the CEO and Founder of Flevy. Prior to Flevy, David worked as a management consultant for 8 years, where he served clients in North America, EMEA, and APAC. He graduated from Cornell with a BS in Electrical Engineering and MEng in Management.

To cite this article, please use:

Source: "What strategies can businesses employ to overcome initial resistance in a new market?," Flevy Management Insights, David Tang, 2024




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