Market Entry Strategy Guide: 6 Ways to Enter New Markets

If you’re running a successful business, one way to ensure sustainable growth is by expanding into new markets. Whether you want to export products into a foreign market or license your brand to other entrepreneurs, you need to develop a well-researched market entry strategy.

Here are market entry strategies to consider, and tips to help implement yours to create more revenue.

What is a market entry strategy?

A market entry strategy is a detailed business plan for entering a new market. This might mean selling your product or service to a new customer segment or expanding sales into a new territory. It includes market research, defining your company’s unique selling proposition (USP), and creating a blueprint for how you’ll effectively sell, market, and distribute your offerings to a new market.

Beyond growth, entering new markets unlocks additional revenue streams and diversifies your operations, which can reduce your dependency on a single region or customer base, helping you manage risk and improve long-term sustainability.

Popular types of market entry strategies

• Exporting
• Licensing
• Franchising
• Acquisitions
• Joint ventures
• New product development

Here’s a breakdown of different strategies businesses commonly use to enter new markets:

Exporting

Exporting means selling your products or services in a foreign market. Direct exporting involves selling directly to customers in that new market—such as through an optimized ecommerce site—while indirect exporting relies on a foreign company, like a distributor, to handle local sales.

Although exporting has a relatively low upfront cost compared to other high-cost market entry strategies like acquisitions, it often requires significant time and effort to set up the necessary production and logistics operations.

Licensing

Licensing is giving another company permission to use your company’s brand, trademark, and intellectual property for a fee. Licensing is a low-cost market entry strategy, but it requires you to already have a recognizable and valued brand. You can license your product to a company in the same industry, or in a related, complementary business.

For example, if you’re an apparel company with a recognizable style, you could partner with a handbag brand that then uses your aesthetic, design sensibilities, and logos on their products. This allows you to enter a new category and develop new networks while your partner company leverages from your brand recognition.

Franchising

Franchising is when one company (the franchisee) pays another (the franchisor) to replicate its business model, sell its products or services, and use its trademark. The franchisor partners with a franchisee in a new market to run and manage a business identical to its own.

Whereas licensing allows a third-party company to use your brand in a new market, franchising allows other companies to replicate your entire business model in a local market with access to your resources and support. Starting a franchise can be a profitable way to enter a new market, but it requires a valuable brand, replicable model, and solid training process. You’ll also be splitting profits with your franchisees.

Acquisitions

An acquisition is when a business expands into a new market by purchasing a local company in that market. This mode of entry is effective since a local business often comes with a built-in production infrastructure, reputation, and local expertise. However, this is a high-cost mode of entry that requires significant resources.

For example, a Toronto-based watch brand that wants to expand operations into a foreign country could purchase an established watch company in Sydney, Australia, to gain access to that new market.

Joint ventures

Joint ventures are partnerships between companies in different markets to share resources and enter new regions. For example, a US-based e-bike company might partner with an e-bike company in the UK to share resources and break into that market.

Joint ventures typically require less investment than acquisitions but often yield lower profit margins since you’re splitting profits with other partners.

New product development

Another way to break into a new market is by developing a new product. This includes generating ideas, creating prototypes, and testing with customers to refine design and functionality.

For example, if you run a company that sells fitness gear such as dumbbells and resistance bands, you could break into a new market by launching a line of activewear.

How to implement a market entry strategy

• Conduct market research
• Clarify your unique selling proposition (USP)
• Choose a new market
• Decide on your mode of market entry
• Create a market entry strategy document
• Use software tools
• Develop marketing strategies to support market expansion

A comprehensive market entry strategy provides a blueprint for businesses looking to expand operations or sales into a new market. Here are the steps:

Conduct market research

Before deciding to expand into a particular market, perform thorough market research on your various options—whether it’s a localized analysis of domestic markets or in-depth studies of foreign territories, countries, and industries.

Use both primary research (surveys, interviews, focus groups) and secondary market research (existing studies and industry reports). Focus on the five Cs of market analysis:

• Company. Analyze your internal data, including sales, brand perception, and product offerings.
• Collaborators. Identify potential partners in new markets—such as suppliers, manufacturers, retailers, or franchisees—who could support your entry.
• Customers. Collect data about your current customer base—focusing on their purchasing habits, underlying motivations, and primary communication channels—and compare that information to other potential markets.
• Competitors. Analyze your industry competition in the markets you’re researching and understand what drives their success. Evaluate your potential competitors’ websites, pricing structures, and products or services.
• Context. A market’s local culture and behavioral norms can make a huge difference in your ability to sell successfully. For example, an ecommerce company selling skin care products needs local knowledge about any potential market’s cultural sensitivities and habits around skin care to better understand the market potential.

Clarify your unique selling proposition (USP)

Define your USP in the markets you're researching by clearly explaining how your brand, products, or services will stand out from competitors.

For example, an ecommerce merchant selling tech accessories might identify a new region where their headphones can be offered at a lower price point while maintaining a healthy profit margin.

Choose a new market

Select which market you want to enter based on your market research. Identify a new market with growth potential for your particular business and industry.

For example, Ridge CEO Sean Frank spoke on Shopify Masters about how his wallet company tapped into a growing market for men’s rings. “It’s way easier to capture a small part of a big, growing market,” Sean says.

By analyzing product trends and customer data, his team identified a demand and quickly scaled their men’s ring line into an eight-figure business within a year.

Decide on your mode of market entry

Choose a market entry strategy that aligns with your financial resources, market size, and market access. Make market entry decisions that allow your business to achieve healthy profit margins.

For example, a company with limited capital and strong market demand might choose direct exporting to sell straight to customers. By contrast, a business facing restricted market access could explore joint venture opportunities with local partners who already have market share.

Sean emphasizes the importance of strong margins in direct-to-consumer (DTC) models, particularly to cover logistics and shipping expenses: “You used to be able to make DTC work with 60% margins; now I think you need a minimum of 80% margins.”

Create a market entry strategy document

A detailed market entry strategy document serves as a blueprint for how your business will expand into a new market. This document should be grounded in the insights you’ve gathered through market research and competitive analysis, using a mix of primary and secondary data to guide your approach. A well-researched strategy document not only helps align your internal team but can also be a critical asset when seeking financing for expansion.

As market conditions evolve, regularly revisit and update your strategy based on key performance indicators (KPIs) like customer acquisition rate and customer acquisition cost (CAC), as well as real-time market feedback.

Make sure your market entry strategy document includes these key elements:

• Mission statement. Write a compelling mission statement that explains your company’s core values, goals, and purpose for existing.
• SWOT analysis. Perform a SWOT analysis for your business by evaluating the strengths, weaknesses, opportunities, and threats your business can face in a particular market.
• Opportunity size. Include your extensive market research to define the size and potential of the new market.
• Value proposition. Describe your USP and explain how your brand, products, or services will stand out in the new market.

Use software tools

Choose software that supports selling, communication, and operations in new markets. Look for platforms that enable easy ecommerce transactions, local payment processing, inventory management, and customer service.

For example, ecommerce merchants using Shopify have access to Markets—which allows them to manage a variety of online stores in different markets from a single dashboard. You might use Markets to add the UK as a sales region and customize your catalog for that market, catering to its specific demands and pricing.

Develop marketing strategies to support market expansion

Develop marketing strategies for new markets using your market research and cultural intelligence to inform content, channel, style, and format.

For example, a jewelry brand’s research may reveal that social media marketing and influencer marketing strategies perform well in countries with a high percentage of the population using social media platforms—like Sweden, which has more than 8.5 million social media users, roughly 80% of the population. By contrast, that same brand could opt for a different strategy, like paid advertising, in a market with less social media engagement—like Mozambique, where less than 9% of the population is on social media.

Allocate marketing budgets based on market potential. Sean applied this strategy when marketing Ridge’s wallet business. Ridge’s market research revealed that their target customers bought wallets roughly every seven years, so it took a higher level of investment in marketing efforts to convince customers to commit to a new wallet.

By contrast, Ridge’s ring marketing was just a fraction of that spend. Because customers already knew of the brand, they were willing to buy a different, high-quality product, rather than purchase the same thing (wallets) again before they needed them. Sean was able to optimize how Ridge spent its marketing budget based on what made the biggest impact in different markets.

Potential risks of entering new markets

• High market entry costs
• Regulatory and logistics considerations
• Insufficient market research

There are several risks associated with entering a new market, including:

High market entry costs

One of the key challenges businesses face when breaking into a new market is managing budgetary and financial constraints. Expansions often require substantial upfront investment to create new products, build new production facilities, or establish new distribution channels.

For example, a furniture company considering entering a new market may need to invest heavily in building local operations or acquiring a manufacturing plant.

Regulatory and logistics considerations

Another challenging aspect of entering a new market is facing confusing or costly regulatory issues, such as import taxes, customs regulations, or tariffs. You can choose a user-friendly software system like Shopify Markets, which includes a built-in Duties & Import Taxes Calculator that automatically considers duties directly at checkout based on the specific market. Note that creating these distribution channels and managing regulations in each market can take time, no matter the tools you use.

As you expand into more markets, your logistics operations can also become more complex, often involving longer shipping timelines and new supply chain challenges. For example, Sean found that exporting to Canada was actually more expensive than shipping to the UK, and adjusted Ridge’s market entry strategy accordingly.

Insufficient market research

You need to be able to access up-to-date and comprehensive information about your market to develop a proper market entry strategy. Relying on cursory research—or entering a market with limited available information—can lead to costly missteps.

For example, inadequate research might cause you to overlook a saturated competitive landscape, making it difficult for your offering to gain traction.