A market entry will vary from the company’s size or existing products. If, for instance, a company like Microsoft or Google enter new markets, they will not do it as niche players.
Instead, they might build, acquire, or grow products that have the potential to gain a large customer/user base, quickly.
However, if we instead take into account a business strategy for startups, therefore, companies entering a market as a new player, there might be three primary ways to do it:
Breaking apart existing offerings
One way is to look at the product and unbundle it compared to what existing players are doing. This process looks at the current product offering in the marketplace and makes the product better and more convenient.
Take the case of Apple turning the music industry upside down, by offering single songs on its iTunes (a model then made obsolete by Spotify as it offered all songs users wanted with a single subscription.
Another entry strategy is that of identifying within the customer journey, the most valuable part, to offer that alone.
Perhaps, Birchbox offering a subscription service to provide customers samples of pre-selected cosmetic products, remove the hardest part from the value chain (select those products in the first place) while providing what might be perceived as the most valuable part (high quality pre-selected cosmetics delivered straight to the customer, thus removing the most challenging part).
In that sense, companies entering several markets will opt initially for a niche, or a small segment of the industry, to validate the idea, gain traction, and evolve their business models from there.
For instance, when PayPal entered the market, it didn’t do it by trying to bring in as many customers from all over the places. It simply found out that many of its power users were on eBay, and it surfed, what it was at the time a giant.
As we’ll see by the end of the article, eventually eBay acquired PayPal, and by 2015, it spun it off. Today PayPal is worth much more than eBay.
Once the company has reached a mature stage with its businessmodel, it gets the time to renew it.
This renewal can happen in several ways. Some of them can be through:
Integration and consolidation: vertical or horizontal
An example of placing bets into the future, is how companies like Google, have within their portfolio, a set of companies, which product and potential businessmodel (many of them are still at development stage) is in part adjacent (like self-driving that can be used also to improve existing products) or, for now disjoined.
Those bets might become a whole new businessmodel, company, or spin off, that might become an entity in its own.
For isntance, back in 2015, eBay spun off PayPal. Today PayPal has a market cap of over $200 billion, comapred to eBay over $40 billion market cap.
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