Ways of Overcoming Entry Barriers in Markets
- A-Level, IB
- AQA, Edexcel, OCR, IB, Eduqas, WJEC
Last updated 21 Mar 2021
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?