#1

Sprinkler market entry strategy

in Allgemein 03.06.2023 13:58
von BalticLegal • 22 Beiträge

The market entry strategy for sprinklers is to expand business to a number of foreign markets at the same time. Its key feature is simultaneous market entry while pursuing benefits that early entry offers. So it's a high-risk, rewarding approach - a successfully executed sprinkler strategy allows for profits from multiple markets while staying ahead of the competition, but a failed entry (retreat from markets) costs a lot of resources and yields little in terms of compensation .


A company enters several foreign markets at the same time and tries to establish itself, to promote the product and at the same time to build a customer base. The company gets profit and internationalization knowledge from multiple markets, which makes spreading the business even more effective since there are so many sources of resources and information. This is similar to a water sprinkler, where each individual droplet is small but numerous and spread all around, so that the entire area nearby is evenly and thoroughly watered.

Implementation
The sprinkler market entry strategy is best suited for companies that manufacture short lifecycle products or whose products are in the launch or growth phase. Usually the sprinkler strategy is complemented by the price skimming technique when the initial price is quite high and lowered over time. This makes it possible to get as many profits as possible in a relatively short time, taking into account the profits of all regional branches.

Another thing to consider when entering the sprinkler system market is process standardization. Since it is almost impossible to customize and adapt them for each individual market, standardization plays an important role in keeping the business expansion process coherent and the incoming data comparable. Of course, this does not mean that everything should be the same - but it is still important to pay attention to cultural differences and their influence on advertising and branding. For example, in 2016, hot dog companies in Malaysia were forced to rename their products after the word "dog" because this animal is considered "unclean" in Islam, one of the major religions in the region. If the sprinkler strategy does not adapt to such specifics, expansion into a particular market can stall.

Advantages
The sprinkler market entry strategy is an effective method of outrunning competition and utilizing the first-mover or technological advantage. While the competitors enter just one or two markets at a time, the business in question raises the brand-awareness in many more markets. Even if the competitors also enter these markets, they will be seen as followers, rather than as innovators. The business that uses the sprinkler market entry strategy has more time to analyze the market and make adjustments. An early simultaneous entry also means more possibilities for registering intellectual property, which hinders the later advance of competitors even more.

Another advantage is the amount of income from a large number of entered market, especially if the business expansion was successful in the majority of the markets. Besides just receiving profits and using them to develop the company, this also gives another advantage - the profits from successfully entered markets can be allocated to less successful regional branches, thus minimizing the risk of withdrawal across all the markets. This makes the sprinkler strategy advantageous in the long-run.

Disadvantages
The sprinkler market entry relies on a big number of markets entered simultaneously, which, in turn, requires a significant amount of initial investments. This includes both finances and staff, as well as the general business expansion planning. Depending on the markets and other circumstances, production facilities, offices, logistics networks and bank accounts will need to be established in numerous markets at once, putting additional strain on resources.

Another disadvantage of the sprinkler strategy is the high risk of entering a number of markets at once. Although a failure and possible withdrawal in one can be compensated by the profits from other markets, if the whole business expansion is unsuccessful, the losses are rather serious (due to big initial investments, see the previous disadvantage).


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zuletzt bearbeitet 03.06.2023 13:59 | nach oben springen


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