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Ways of Overcoming Entry Barriers in Markets

Level:: A Level, IB

Board:: AQA, Edexcel, OCR, IB, Eduqas, WJEC

In contestable markets the entry and exit barriers are low creating a situation where both actual and potential competitive pressures are high. How can a business overcome some of the traditional entry barriers?

Here are some suggestions:

Start with a minimum viable product and then iterate - responding to consumer feedback
Use a disruptive pricing model / have different objectives
Produce outstanding content/products – this makes a product less price sensitive
Leveraging an existing brand to enter a new market - an economy of scope!
Viral marketing to cut the marketing costs of attracting new sales
Acquisition of a business that is already well-established in a market
Leasing rather than buying equipment / retail space to reduce fixed costs
Out-innovate existing firms (using high research intensity)
Use of open-source rather than proprietary software to cut costs
Lean and flexible manufacturing / supply on demand
Free-ride on scaled channels e.g. using Amazon market place / You Tube as a sales platform
Play the long game – accept that losses will be made initially - but can shareholders tolerate these losses?

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Economics

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Ways of Overcoming Entry Barriers in Markets

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