Week 4: Entering a new market

The market attractiveness --> The choice of the market-->The Choice of entry type--> Entry strategy

Choice of the market: 1) the market attractiveness  2) market barrier

波特五力模型

Week 4: Entering a new market

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Structure entry barriers

structural barriers: 1) the nature of the industry 2) the position of incumbent within the industry

control of resources :  nature resource, supplier capacity, patents, distribution channels, timing (for airline), government mandate license

economic scales and scope

Marketing advantage of incumbent: customer's loyalty for brand, switching cost

strategic barriers: 1) incumbent's aggressive actions 2) intended to keep the new entrant out of the industry

offer long-term contract to customers; over branding;

When we consider whether we shall attack the new entrants, we shall also consider the NPV.

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Entry Strategy

Commitment: a creditable commitment of the entrant stay in the market may stop the retailing of the incumbent

1. High suck cost investment (establish some factory only for the product, R&D, Advertising)

2. Exit from other strategy segment to focus on the new entry

Value Chain reconfiguration

一开始进入市场的时候，以廉价低端品进入。站稳脚跟后，开始产品升级。

Judo Economics : 低价策略进入，若对方发现阻止我方进入成本高于我方拿走的市场，对方则不会反击。

Niche Market

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Deterring a market

control of key resources, economic scale, MKT advantage, Commitment

Limited pricing (only works for incomplete information)

- Keep low pricing to signal the potential entrant (low MKT profit, low incumbent cost)

Predatory pricing 倾销

Pre-emption (先占策略）

1. 过度投资，把各种成本降到最低，让潜在竞争对手望而怯步。

2. 横向发展多条产品线，把市场供应端选择填满

3. 在地理位置上多点布局，把市场摊位占满