Market entry strategy

Q2 2008

A sound market-entry strategy gives an operator greater control over its market introduction and launch expectations, thereby ensuring financial targets are met
Pressures faced by new entrants

A well-founded market-entry strategy minimises the uncertainties faced by new entrants Analysys Mason has developed a systematic approach to market-entry strategies, allowing us to create well-supported and objective plans that extract maximum value from internal assets and investment, and ultimately increased competitiveness and secured revenue We have used this approach to:

Internal constraints and expectations Time constraints:

rapid deployment is crucial to avoid rise in market share cost and to deliver predicted financial results

decrease the financial uncertainty that derives from lack of comprehensive market analysis and a structured strategic plan enable business plan collaboration and financial planning

Resource limitations:

initial business case assumptions need to be revisited to better correspond with market conditions and chosen market position

core launch teams are often rapidly assembled, and specialist expansion is done gradually, creating a large resource gap during the implementation phase

Financial pressure:

create launch efficiency by delivering a framework for subsequent planning of tactical launch activities, coordinating and prioritising tasks for launch team enable risk management and market perception control through contingency planning

as financial targets and expectations have been set prior to launch, any unpredicted market activity and launch delays will disturb initial customer take-up and revenue generation External constraints and expectations

Launch organisations face immense pressures on market entry, created by internal and external expectations:

Market data:

some of these pressures can be eased by developing a clear and structured market-entry strategy and effective functional plans

in many instances organisations lack in-depth understanding of market drivers or have limited access to market data competitors will plan pre-emptive, disruptive action to improve their own positions and secure their customer base prior to new entry

Competition:

Analysys Masons structured approach to developing an entry strategy begins with a comprehensive analysis of the market, based on market data or tailored research
Market analysis Macroeconomic outlook

Our approach to developing a market-entry strategy follows a proven and structured process, based on extensive industry experience and in-depth understanding of all aspects that feed into a commercial launch A comprehensive analysis, using market data and tailored market research, allows us to assess all areas affecting the operators strategic direction:

Market dynamics

Competitive landscape

Regulatory environment

Internal assets / Technology

market dynamics: detailed consumer and business market segmentation and analysis of market drivers will be undertaken to identify the most valuable target segments and underlying reasons for market growth. Specific target areas are evaluated to provide key inputs: retail structures, financial transactions systems and Internet usage provide input to sales and distribution planning competitive landscape: extensive competitive profiling in areas such as positioning, brand, target segments, value proposition, market offer, pricing, customer care, sales & distribution, coverage, network & support systems enable assessment of competitors strengths and weaknesses macro-economic outlook: analysis of relevant macroeconomic data determine market and segment growth legislation and regulatory framework: description of limitations or possibilities within the current regulatory environment that affect market and segment growth internal assets/technology: analysis of all internal assets including technology, brand, partnerships will be done to clarify which sustainable competitive advantages the company holds

Internal SWOT

Identified strategic risk areas Summary and conclusions

Market opportunity description Market entry strategy Vision and Mission Objectives Overall Strategy Positioning Value proposition Brand Target segments Strategic directions Pricing Brand and communication Sales and distribution Tactical launch plan Products & services Pricing Brand and communication Sales & distribution channels Customer service Products and services Customer service Launch phasing Contingency plan Internal and external factors

An internal SWOT highlight areas of valid advantages and disadvantages, providing input to market entry positioning and value proposition Identification of strategic risk areas at an early stage enables preparation of mitigating actions prior to market entry Conclusions from the market analysis together with internal SWOT and identified strategic risk areas form the basis for describing the market opportunity

Analysys Masons overall market entry strategy statement and market position clearly demonstrates which main directions are necessary to reach market objectives

A description of the companys vision and mission statements as well as financial objectives form the starting point for the market entry strategy as they set the framework in which a new entrant will function Short-term objectives, sales targets, market share and brand awareness, will be set against the market opportunity and supplied as input to the business planning team Analysys Mason will develop an overall market entry strategy statement, clearly demonstrating which main directions are necessary to reach stated objectives The positioning statement visibly describes the companys strategy in relation to competition and the value proposition captures the companys differentiating advantages and their benefits to potential customers
Market position Consumer Company A Positioning values

Market analysis Macroeconomic outlook

Market dynamics

Competitive landscape

Regulatory environment

Internal assets / Technology

Internal SWOT

Identified strategic risk areas Summary and conclusions

Market opportunity description Market entry strategy Vision and Mission Objectives Overall Strategy Positioning Value proposition Brand Target segments Strategic directions Pricing Brand and communication Sales and distribution Tactical launch plan Products & services Pricing Brand and communication Sales & distribution channels Customer service Products and services Customer service Launch phasing Contingency plan Internal and external factors

Price

Company C

Company B

Quality Company B Company C Company A

Price Premium Premium Leader Leader Moderate

NW/ oS Q Leader Leader Adequate Adequate Adequate Adequate

Service Service portfolio Broad Broad Narrow Narrow Medium Medium

Customer service Leader Leader Basic Basic Basic Basic

Business

The brand strategy explains which values are important to communicate in order to enhance the companys relationship with its customers Targeted customer segments that need be addressed in order to deliver desired objectives will be specified and prioritised Strategic directions in all functional areas; products & services, pricing, brand & communication, sales & distribution and customer service further detail the overall entry strategy. Finally, the launch phasing section explores the various viable market entry options, their pros, cons and pre-conditions

Detailed tactical launch plans enable efficient and controlled implementation, leading to rapid market introduction
Market analysis

Strategic directions are further detailed into a tactical launch plan, covering all functional areas. This provides the launch team and vendors with necessary specifications for implementation and ensures that all launch activities support the overall market entry strategy A product & service roadmap will be developed by matching technical capabilities and benefits with customer needs. The roadmap includes detailed set of individual services or product packages at and post-launch Pricing launch packages and separate services includes development of complex price modelling and deployment of conjoint research to assist in the choice of, from customer perspective, the most valuable pricing option Brand and communication plan for market entry includes development of brand wheel (attributes, benefits, values) and full launch campaign planning The development of a sales and distribution channel plan involves creation of a tailor made sales and commission model, detailing of the companys sales and distribution channel structure and analysis and recommendation on commission structure and levels The customer service plan includes high level customer service processes and customer centre dimensioning Clear contingency planning enables the company to pre-empt the occurrence of situations that affect the planned activities and prepare plans to remedy those, resulting in shortened reaction time. Both internal and external factors will be analysed

Market dynamics

Competitive landscape

Macroeconomic outlook

Regulatory environment

Internal assets / Technology

Internal SWOT

Identified strategic risk areas Summary and conclusions

Market opportunity description Market entry strategy Vision and Mission Objectives Overall Strategy Positioning Value proposition Brand Target segments Strategic directions Pricing Brand and communication Sales and distribution Tactical launch plan Products & services Pricing Brand and communication Sales & distribution channels Customer service Products and services Customer service Launch phasing Contingency plan Internal and external factors

Internal e.g. technical and organisational issues External e.g. competitive market activities and regulatory actions

Structured and comprehensive planning and interaction with business planning and technical teams enables coordinated effort, bringing market entry success

The commercial market entry strategy must work in unison with business planning and technical team to ensure a coordinated market entry approach

Business planning unit requires market input when developing business plan and budgets

Market entry strategy and tactical launch plan

Positioning, price strategy, marketing investment and coverage (in relation to competition) affect potential market size and share Segment uptake assumptions serve as input to market share calculations
Business plan and budget Technical roadmap and roll-out plan

Development and deployment of network and support systems need take commercial requirements into consideration and vice versa

Technical possibilities and limitations are taken into consideration when developing the market entry strategy Market offer and customer approach produce requirements for support system configuration

In addition to market entry strategy development, Analysys Mason can provide complete launch support and coordination of connected business functions
Key issues Launch management structure

The overall project management office (PMO) coordinates the roles of different teams to ensure that the management is fully updated of progress and potential bottlenecks for action The individual functions can be undertaken by the Analysys Mason consortium or by client entities, with the objective of handing over the running of the business to the client

Master Project Plan and Project Management Office Business Planning and Budgeting Market entry strategy and execution Product roadmap Tariffs Advertising Sales and Distribution Customer service

Network deployment

Regulatory support

Back-end support

Vendor interactions Site acquisition reporting Installation management

Interconnect negotiation support Regulatory lobbying support

Customer care Billing

Organisational management Source: Analysys Mason Corporate and operational KPIs

Approach to overcome challenges

Launch support covers a range of activities that will enable the successful launch of the business in an aggressive timescale Determining the exact role of different entities needs to be undertaken in an implementation planning phase that will balance the cost of external resources with the speed of launch, based on intensive, short-term external team effort

Case study: Fourth entrant market entry strategy and detailed launch plan
Business challenge
Our client had acquired a mobile license for Afghanistan, entering as the fourth operator in an extremely difficult market with regards to economic and social structures, security issues, geographical accessibility and lack of reliable market information. Furthermore, our client did not have a separate Programme Management Office (PMO) to oversee launch implementation, increasing the demand for a clear and structured market entry strategy and subsequent tactical plans Analysys Mason was hired to undertake development of a market entry strategy and detailed launch plan to steer the launch team and contracted suppliers towards a successful market introduction. In parallel, Analysys Mason developed a long-term business plan and detailed operating model / budget Conducted a comprehensive market analysis Developed a robust market entry strategy Setting attainable sales objective, in liaison with the business plan
Subscribers (thousands)

Approach

Q1

Q6 objectives

Market position Residential

Determining durable positioning and value proposition Developed detailed tactical plans for each functional area Recommended segmented market offers for launch and post-launch, having evaluated various options Build a comprehensive price model and initiated market research to evaluate tariff options Developed complete sales and distribution channel structure including modelling of commission structure and levels Created a brand adapted to local market conditions and developed a communication plan

Market share

Price

Quality

Q1

Q2

Q3

Q4

Q5

Q6

Business
Sales and distribution network

Segment A Market share Market offer options Type of approach Segmented packages

Segment B

Benefits and results

Analysys Mason produced a complete market entry strategy and detailed tactical launch plans, allowing our client to formulate a clear and differentiated market position with aligned market offering, pricing, communication, customer service and sales & distribution structure. This enabled complete stakeholder buy-in and efficient launch plan execution

Description

Large distributors Small distributors P3 P4

Over the counter wholesale

Own stores

Direct sales force

P1 Tailor- made approach

P2

Points of sale Base Authorised retailers Residential market Business market

One- size-fits-all Unique product

Analysys Mason has assisted several new entrants worldwide in developing their market entry strategies
Project focus Client type Key project results Analysys Mason developed a robust strategy for entering the mobile market by developing alternative service propositions and marketing strategies and analysing different technology options (UMTS, CDMA 2000 and WiMAX), roll-out approaches and handset strategies. Analysys Mason has also developed high level financials for the various options in order to make a detailed recommendation. Our conclusions were accepted by the Board and we were praised for our clear reasoning and innovative approach Analysys Mason worked as part of a wider team to support the launch of a new mobile operator in a developing Asian country. The task consisted of business planning, international connectivity assessment and program management support

Development of a mobile strategy (including North African alternative UMTS, CDMA 2000 and WiMAX fixed and mobile operator technologies)

Launch support

Asian wireless operator

Assessment of a mobile entry strategy offering limited mobility services

North African fixed operator Analysys Mason provided insight into successful market entry strategies employed by late mobile entrants and examined markets and operator performances where spectrum obtained initially or permanently constrained to offer limited mobility services Analysys Mason worked as part of a wider team which included the client's senior bid team, a technology vendor and other parties. The client recognised that coming late into the market as a 3G operator, and being one of numerous infrastructure-based operators in that country required an innovative approach to the market. Analysys Mason produced a credible bid, financial model as well as a solid mobile business strategy taking into account 3G technology, network planning, local planning and network build issues, the local mobile market, product propositions and channels to market Analysys Mason carried out a comprehensive market and technical due diligence, covering all elements of the core business of the operator, including operations, technology, sales and marketing, information technology systems and human resources. Analysys Mason developed a growth strategy for the acquisition target, using the outputs of its due diligence, as well as those from the financial and legal ones. On this basis, Analysys Mason built a business plan and subsequently contributed to the preparation of the bid book

Development of a mobile business strategy Western European fixed for a new entrant operator

Development of a strategy for the smaller Investment bank mobile operator in a market of four operators as part of an acquisition process