Market Entry Barriers

More In Developing Your Export Strategy

Making the 4P's Work in an International Market:
Issues to be Aware Of

The basic principle of the marketing mix is the relationship between price, promotion, product and place (distribution). Each of these four areas must complement each other. In international markets there may be factors that are outside your control that will impact on your preferred marketing mix and you will need to take these into account when choosing a market(s).

Your pricing level may be distorted by such factors as price discrimination imposed by host governments on foreign goods that may make your price to compete or too low to provide a reasonable profit margin.

Your marketing and advertising efforts will often be determined by cultural laws and norms and the availability of different types of media.

Your product will require some degree of change for the market you wish to enter due to cultural differences, the level of economic maturity of the country and in many instances because of technical and/or product standards imposed by the host country.

Your potential distribution process will be impacted by the availability or agents and distributors and the complexity of the channels for getting your product to the customer.

Other Market Entry Issues

In addition to the issues noted above there are a host of other issues you will need to be aware of before making the final decision as to which market(s) to enter. It is important to keep in mind that a government’s role is to protect its citizens and business first and if they feel their firms cannot compete against foreign competition (you) they will impose restraints that you will have to take into consideration.

First and foremost you need to determine what levels of tariff (basically a tax on imported goods) are imposed on your product for entry into the market. You should also determine if there are any quota levels for your kind of product and if there is still room within that quota for your product.

Governments also sometimes provide subsidies to their local firms to help them compete against foreign competition and can also impose strict standards on product quality or insist on local content being part of your product. Each of these can and will add costs to your final price and may make you uncompetitive in that market(s).

Finally, ensure that your product is priced fairly and competitively so that you are not accused of dumping. Dumping at its most basic is selling your product into a market at below production cost to gain market entry and market share. The penalties for dumping can be quite severe from financial to outright banishment from that market.

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