MARKET ENTRY FAILURES

Bringing a new product to market, or entering a new geographic market, can provide a company with significant growth opportunities when managed well. However, market entry can be fraught with difficulties, particularly when there is a failure to understand the vagaries of the external environment. This research considers two recent examples of market entry failure, one involving taking an existing product to a new geographic region, the other introducing new products to an existing geographic market.

Egg is an online bank based in the United Kingdom that recently expanded its operations to include France. It entered the French market with a credit card (Carte Egg) that failed to meet the company's internal expectations. Traditionally, France has proved a difficult market for financial institutions based in the United Kingdom, and Egg sought to overcome some of these problems by acquiring ZeBank in 2002. However, the acquisition failed to quell criticism of both the acquisition and the entry of the British company into the French financial market; this criticism was made vocal in French media and is considered by Egg to be one of the main reasons that the company has had difficulty in making inroads in the French market ("Egg Tumbles," 2003).

This example illustrates the failure to recognize the importance of understanding the market where a company is considering conducting business. Egg knew that English financial institutions histori

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tly, Smirnoff and softball seemed hopelessly separate. Beer companies, for their part, saw spirits drinkers as a highly desirable demographic, flush with money and promise. The development of malt-based ready-to-drink (RTD) beverages, or "malternatives," seemed to give spirits companies the leverage they needed to wrest beer occasions away from the Budweisers of the world (or at least share them). In turn, malternatives gave beer giants the ticket they needed to shoulder into the upscale liquor market. The malt in malternatives gave these drinks their kick, both from an alcohol and marketing perspective. Malt is an attractive, malleable ingredient; it can be made to taste like just about anything. Malt is also taxed at a lower rate than spirits, thus allowing both liquor and beer marketers to target the opposition's customers with a low-priced, spirits-flavored beer alternative. Tempted by the promise of national brand extension (as well as the opportunity to skirt the spirits industry's self-imposed TV advertising ban), these manufacturers practically tripped over themselves to grab a slice of the perceived pie. They rushed a wide range of malternatives to market, including Smirnoff Ice, Captain Morgan Gold, Stolichna

Category: Business - M