Literature Review of Factors Affecting Products Entering Emerging Market

            Entering new markets is always a challenging task that requires meticulous study of the market environment and the factors that are associated with the transition of entering new markets. For a business to launch any product in the market, it is essential to first conduct a deep analysis of the market and ensure due diligence so that the company can ensure that the new venture would be profitable. For this many factors have to be given consideration. Inadequate research into these factors could cause serious financial damage to the business because the company expanding its product reach would not be able to understand the consumers and the business environment existing in the country. These factors have been collectively identified as the Euromonitor International Four Pillars for market entry strategy.                                     

            The first pillar is market and it includes factors like macroeconomic stability, consumer market size, growth and openness. The second pillar is populations – it helps in analyzing the demographics of the market and how business products would be received in the market environment. The third pillar is access which would include factors such as infrastructure and availability of internet. The fourth pillar is business environment that focuses on the overall regulatory environment in which the business operates.

The first pillar is concerned more about the structure of the market which is defined by factors such as macroeconomic stability, consumer market size, growth and openness (Boumphery). Macroeconomic stability refers to the economic conditions in the country and the fiscal and monetary policy followed. Moreover, inflation, balance of payments and the overall economic environment of the country plays a role for facilitating business. Thus, macroeconomic stability becomes an important factor. This is followed by the size of the market so that it can be ascertained whether the product would generate enough demand or not. Moreover, growth of the market is also important. A stagnant market will not be a suitable for investments and therefore, a market with high rates of growth in terms of purchasing power that can generate steady demand would be ideal. Lastly, openness of the market is also important. Market openness refers to the liberalization of markets. The more open and liberalized a market,  he greater are opportunities for entering the new market (BusinessWire).

The second pillar focused on the demographics and is quite pivotal. It is essential to know where the target market lives, its age, habits, size and growth trends. Moreover, it is also important to know where they live that is in urban or rural settings and what kind of life styles they have. All these considerations must be factored in when making the decision to launch a new product in the market.

The third pillar relates to access. Firstly, the market structure is important as mentioned as factor one. If, for instance, the product market is a monopoly there will be high barriers to entry and exit but it would be relatively easy to enter and exit if the market is competitive in nature. More important is the physical accessibility which is determined by the infrastructure and the availability of connectivity such as internet. The better the communication network in terms of roads, rails and other means of transportation the greater the prospects for success of new products entering the market (Boumphery). Moreover, internet in today’s age has become more important as it is being used as a marketing tool as well. Therefore, it has also become important that there are a great number of internet users so that products can be marketed online.

Lastly, business environment is another very important factor. There are different factors that contribute to the business environment including ease of doing business, regulations, factors such as corruption and the human capital available in the country (BusinessWire). The business environment with respect to ease of doing business varies in different countries. In developing countries, there is the problem of corruption and nepotism which makes conducting business difficult. However, in developed countries, the regulations are quite strict which also adds to the cost of doing business and can be difficult in themselves. Thus, this factor has to be given consideration when new products are launched in the markets.

Businesses are now focusing on emerging markets as the developed markets are somehow saturated and do not show prospects for lucrative profits. Therefore, astute business planners focus on newly emerging markets and to make use of first mover advantage. This has both benefits and costs. There are benefits in the form of low labour cost, welcoming attitude of the governments of host countries, low advertising costs and less competition (Nakata and Sivakumar). However, at the same time, adaptation to these markets in required that are sometimes not technologically efficient and have economic, social and political issues that could hinder the progress of business. Thus, entering new emerging markets can be a tricky business and requires thorough study and analysis of the market environment. 

Koch (2001) analyzed that market selection and the entry mode for selection are two aspects of one decision process. He examines factors affecting market selection and market entry mode selection and divides them into three categories including external, internal and mixed. The study concludes that there is dominant role of internet in today’s day and age in facilitating international business and expediting business processes and therefore, it should be studied in more detail.

When a product is launched into market, it has to be marketed properly so that the consumers know about it. Advertising plays a pivotal role in consumer decision making. There are different methods of advertising but their effectiveness is dependent on the perceptions of consumers (Greyser 1972). Many studies have found that there is strong link between consumer attitudes and advertising which is also a precursor for development of consumers’ attitudes towards a brand (Mackenzie and Lutz 1988; Thorson 1981). Thus, when the product is launched, an appropriate mechanism in the form of advertising needs to be devised so that product and its message can reach the consumers. This is essential for the product to be successful.

This study delves into subjects: the entry of a new product and that too in an emerging market. Therefore, literature needs to be studied in more detail regarding the factors that affect entry of new products into a market, the characteristics of emerging markets have to be studied and then factors affecting entry of new firms in emerging markets need to be analyzed. Different factors have to be studied so as to suggest which factor play an important role for new products entering emerging markets.

References of Factors Affecting Products Entering Emerging Market

Boumphery, S. "Succeed in Emerging Markets: Selection, Strategy and First Steps." 3 August 2015. Insights Association. 6 July 2019. <https://www.insightsassociation.org/article/succeed-emerging-markets-selection-strategy-and-first-steps>.

BusinessWire. "Four Pillar Approach to Entering an Emerging Market Identifies Opportunities and Challenges for Expanding Businesses." 18 November 2014. 7 July 2019. <https://www.businesswire.com/news/home/20141118005056/en/Pillar-Approach-Entering-Emerging-Market-Identifies-Opportunities>.

Koch, A J. "Factors influencing market and entry mode selection: developing the MEMS Model." Marketing Intelligence and Planning (2001): 351-361.

Nakata, C and K Sivakumar. "Factors in Emerging Markets and Their Impact on First Mover Advantages." Marketing Science Institute, 1995.