Every market operates within a larger environment. This is the breakdown of factors to consider when evaluating how attractive a market segment is when considering entry.
Economic Factors
How susceptible to significant change is the economy of the market is the main consideration. The common example that is also used by Hooley (et al. 2017) is the New Zealand wool export in the 1920s following Australia’s decision, NZ had to reduce their floor price by 20% which had the obvious significant impact on the market.
Legal and Political Factors
A market vulnerable to political or legal factors are generally less attractive. This can be very situational and can, in fact, create an attractive market in the right situation.
Regulation
Regulation can often limit innovation and make a segment less attractive to new entrants. Regulation can also play a strong role in protecting a new entrant once they have made it into the market from other new competitors.
Social Responsibility
A growing trend over the last decade is the concern for being environmentally friendly. This may create an attractive market opportunity if you are able to enter a market with the only ‘green’ approach, allowing you to differentiate. It can also make a market less attractive if you are entering the cosmetics for example and competing against The Body Shop who have a strong sustainability program in place already.
References:
Hooley, G, Piercy, N, Nicoulaud, B & Rudd, J 2017, Marketing Strategy & Competitive Positioning, 6th Ed., Pearson, Harlow, UK.
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