Case Study on Market Entry Strategy for the South African Market
Outsource2india conducted market research and analysis for a Foot care major in the US. Within 15 working days, O2I presented a detailed market research report spanning 23 cities in various regions of S. Africa. O2I’s market entry strategy for the South African market included a channel development strategy and pricing strategy that were implemented by the client.
Mr. Peter’s* company is a major player in the US Foot care industry and a market leader in the manufacturing of quality Foot care products to cater to the needs of medical professionals and consumers. Whether for people suffering from diabetes, arthritis, foot trauma or for people who just want to wear truly comfortable shoes, Mr. Peter’s Foot care products meet a basic, daily need of people for quality footwear that help them lead a comfortable life.
Now that his Foot care products were well established in the United States and China, Mr. Peter wanted to expand into markets in different parts of the world and had decided to focus on South Africa.
Before penetrating the market in South Africa, Mr. Peter wanted to explore the market. Outsource2india was assigned the task of performing marketing research for South Africa.
The challenge for Outsource2india lay in understanding the requirements of the client, integrating the inputs of his company regarding the product and pricing into the analysis and providing an excellent quality of output in terms of workable marketing strategies, all within working 15 days.
The 23 cities covered in the research were located in various regions of South Africa.
- Kwazulu Natal North Coast
- Western Cape
- East London
- Port Elizabeth
- Cape Town
- Kwazulu Natal
The Project - Technical solution provided by O2I
Choosing the best way to penetrate a new market is a difficult task, requiring the company to keep in mind several factors such as -
1. Market entry objective: e.g. rapid acquisition of significant market share
2. Perceived risk: Customers could perceive great risks in product switching and may be reluctant to buy new products.
3. Product life-cycle: In the early stage of the product life cycle, opportunities may be greater for first movers.
4. Competition: New entrants may face tough competition in the new market chosen for entry. When supply is greater than market demand, competitive action will be intense and entry may not be sensible at all.
5. Marketing Strategy: Different strategies may be adopted while entering into new markets. First is the highly aggressive, broad-front strategy using all forces across a wide scope of market segments.
Second, the non-aggressive and focused entry strategy which is calculated entry into a narrowly defined market. Third is the guerrilla approach which is a non-aggressive and broad-front market entry which uses relatively low resources to target the most promising positions in markets.O2I expert team did a thorough research on the South African market and recommended different market penetration strategies such as Blitzkrieg entry, the Cavalry Charge, The Strike Focus, and Guerrilla Tactics for different parts of Africa.
Mr. Peter expressed his satisfaction with O2I’s comprehensive research report as follows: “Thank you for the research report. Thank you for all of your time and attention. The overall process is going well and I am pleased with the direction, the pace, and the commitment I feel from you and your staff. Keep up the good work.”
Mr. Peter has received immense value from the research conducted by O2I which has helped his company to formulate successful market entry strategies with respect to
- Technical innovation strategy- perceived and demonstrable superior products
- Product adaptation strategy-modifications to existing products
- Availability and security strategy - overcome transport risks by countering perceived risks.
- Low price strategy-penetration price
- Total adaptation and conformity strategy - customized product development Channel development strategy in the South African market.
The client has chosen to adopt the channels recommended by the O2I Research and Analysis team and is successfully using the doctors, stockists and C&F agents suggested by O2I to promote its products in South Africa. O2I also recommended a pricing strategy for the different regions of South Africa which the company has implemented successfully.
* Name changed to protect identity
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