Market Entry - Any differences when considering new products vs. new geographies?

Case Interview market entry
Recent activity on Dec 14, 2018
3 Answers
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Anonymous A asked on Dec 13, 2018

Hi guys

I've been doing some market entry cases and noticed that most are 'new product' market entry questions, but there is the occasional 'new geography' market entry. I was wondering if the approach to answering these questions should be different? Or if the fundamentals of the analysis remain the same?

Thanks for all the support

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Sidi
Expert
updated an answer on Dec 13, 2018
McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers

Hi! What you are asking is whether there is a difference in approach between new product launch or new market entry. Well - the fundamental decision logic remains the same of course! And let me tell you a secret: the principle logic is identical across basically any kind of decision option that a client wants the consultant to assess!

A market entry/product launch/company purchase/capacity expansion/company acquisition/ etc. etc. makes sense if (i) it is economically viable, (ii) the client has/can acquire the required capabilities, and (iii) the risks are manageable. Economic viability is the central analysis to conduct and should be centered around value creation. You disaggregate value into its quantitative components and sub-components with a rigorous logic tree, and then you map qualitative drivers to each quantitative sub-component.

THIS is how you approach cases in a rigorous and bullet-proof way! Structuring a case means you outline the logic according to which you will answer the precise question of the client. Structuring does NOT mean to provide a structured list of the areas ("buckets") that you want to look into! Once you understand this, and once you have learned how to properly build your case solving roadmap aroung this insight, you don't need all these nonsense frameworks anymore which are floating around these days. NONE of them.

Cheers, Sidi

(edited)

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Vlad
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Content Creator
replied on Dec 14, 2018
McKinsey / Accenture Alum / Got all BIG3 offers / Harvard Business School

Hi,

I would certainly approach these cases differently:

New product

I recommend starting with clarifying the objective - Which metrics you need to achieve with the product? Then I will follow up with the structure:

Analyze the market:

  • Size and growth rates
  • Segments (geographical, customer, product)
  • Distributors / Suppliers
  • Regulation
  • Key market trends

Analyze our product:

  • The value proposition of a product (Core / non-core features),
  • Different use cases for the product (Business / private / government, etc)
  • Unit economics (Current unit costs and costs in relation to scale, Investments, ROI targets, Competitor / substitutes pricing)
  • Key capabilities to compete (Patent, distribution, etc)

Analyze the competitors:

  • Market shares, growth rates, profits
  • Product / customer / geographical mix
  • Products (Value proposition)
  • Unit economics (Value proposition vs. price vs. costs)
  • Key capabilities (Distribution, supply, assets, knowledge, etc)

Go-to-market strategy:

  • Are we achieving our objectives?
  • Costs, benefits, and investments
  • Time to market
  • Channels
  • Brand
  • Risks

Market entry

Always start with clarifying an objective:

  1. What are we going to achieve on the market and what is the timeline?
  2. What are our business model and revenue streams now in the current market
  3. Are we going to enter organically or non-organically?

Then I would use the following structure:

Market

  • Size
  • Growth rates
  • Profitability
  • Segments and growth rates
  • Distribution channels
  • Bareers (regulation)

Competition

  • Market shares of competitors and their segments (see the next point)
  • Concentration / fragmentation (A fragmented market with lots of small players is less mature and easier to enter from a scratch. Concentrated market is hard to enter but has potential acquisition targets)
  • Unit economics of the players (Margins, relative cost position)
  • Key capabilities of the players (e.g. suppliers, assets, IP, etc)
  • Previous / projected entrants

Company (If the case says you have the company that operates in a different / adjacent market)

  • Your current capabilities (e.g. suppliers, assets, IP, etc)
  • Brand
  • Previous experience in entering the markets

Entry strategy

  • The need for investments
  • Time to enter
  • Branding (Do we keep an existing brand / do sub-brand if it is the new segment or create a new brand?)
  • The existence of acquisition / licensing / JV targets if relevant
  • Risks

Good luck!

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Guennael
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replied on Dec 14, 2018
Ex-MBB, Experienced Hire; I will teach you not only the how, but also the why of case interviews

I love Sidi's answer - completely agree with it. Just one nitpick... you also need to confirm there is demand for your product. Yes, there usually will be - but please do confirm anyway.

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Sidi gave the best answer

Sidi

McKinsey Senior EM & BCG Consultant | Interviewer at McK & BCG for 7 years | Coached 300+ candidates secure MBB offers
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