S&C

Market Entry Assessment

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Market Assessment & Analysis

New Market Entry = High Risk/ High Benefit

Entering the Market isn’t that Simple as it Sounds

Entering a new market, particularly in a foreign context like Bangladesh, requires a holistic approach that considers various factors influencing success. With a population of over 160 million and a rapidly growing economy, Bangladesh presents significant opportunities for foreign companies. However, understanding the complexities of the local market is crucial for developing an effective entry strategy.

First and foremost, it’s essential to grasp the economic drivers shaping Bangladesh. The country has experienced consistent economic growth, averaging 6-6.5% annually over the past decade. This growth is driven by sectors such as textiles, agriculture, and services, making it an attractive destination for foreign investment. The government offers various incentives for foreign direct investment (FDI), including tax holidays and duty exemptions on imports for certain sectors. Understanding these economic drivers is essential for positioning your business effectively.

Equally important are the cultural nuances that influence consumer behavior in Bangladesh. The market is shaped by unique social dynamics where personal relationships play a vital role in business dealings. Building trust with local partners and customers is crucial for long-term success. Companies must adapt their marketing strategies to resonate with local values and preferences, which may differ significantly from those in their home countries.

Navigating the regulatory environment in Bangladesh can also be complex. Foreign companies must comply with local laws regarding business registration, taxation, labor regulations, and environmental standards. Engaging local legal experts can facilitate compliance and help avoid potential pitfalls associated with regulatory non-compliance.

Bangladesh Market Entry Assessment

Feasibility Studies for Market Entry and Penetration

For foreign companies looking to establish a presence in Bangladesh, market research and feasibility studies are essential tools. These processes help assess market demand, pricing sensitivity, and potential barriers to entry, providing a solid foundation for informed decision-making.According to the Bangladesh Bureau of Statistics, the country has witnessed a 6.94% GDP growth rate in recent years, indicating a robust economic environment. However, this diverse population has varying tastes and purchasing power influenced by cultural norms and economic conditions.

Conducting Feasibility Studies

Feasibility studies complement market research by evaluating the practicality and viability of a business idea within the target market. These studies assess various dimensions, including financial requirements, operational capabilities, and regulatory compliance. A well-conducted feasibility study can help mitigate risks associated with new market entry by identifying potential challenges early on.In Bangladesh, feasibility studies often focus on several key areas:

  1. Market Demand Assessment: Understanding the potential demand for products or services is critical for any new venture. For example, the e-commerce sector in Bangladesh is projected to grow at a compound annual growth rate (CAGR) of 15%, reaching an estimated value of $3 billion by 2025. This indicates a strong demand for online shopping platforms.
  2. Pricing Sensitivity Analysis: Evaluating how sensitive consumers are to price changes helps businesses set competitive pricing strategies that maximize profitability while remaining attractive to customers. In Bangladesh, where approximately 40% of the population lives below the national poverty line, price sensitivity can be high due to varying income levels.
  3. Regulatory Barriers: Navigating the regulatory landscape in Bangladesh can be complex for foreign companies. A thorough feasibility study should include an analysis of legal requirements related to business registration (which typically takes 30-60 days), taxation (corporate tax rates range from 25% to 45% depending on the sector), labor laws, and environmental regulations.
  4. Competitive Landscape: Identifying existing competitors and analyzing their strengths and weaknesses allows businesses to carve out a unique value proposition. For instance, in the telecommunications sector, Grameenphone holds approximately 46% of the market share, making it essential for new entrants to understand their competitive positioning.
  5. Operational Considerations: Assessing logistical challenges such as supply chain management (Bangladesh ranks 168th out of 190 countries in ease of doing business according to the World Bank) and distribution networks is vital for ensuring smooth operations post-entry.

To effectively conduct market research and feasibility studies in Bangladesh, it is beneficial to engage local consulting firms with expertise in the region. These firms possess valuable insights into consumer behavior, regulatory frameworks, and industry trends that can significantly enhance the quality of research conducted.

Market Entry and Feasiblity studies, SHubhanakAR Consulting

Strategic Pathways for Entering the Bangladeshi Market

. In Bangladesh, local businesses are particularly receptive to joint ventures where the foreign partner supplies foreign exchange capital and technology, while the local partner contributes land, real estate, and an understanding of the domestic market. In H1 2024 alone, Bangladeshi startups raised USD 19 million across 22 deals despite facing a 57% decline from H1 2023 due to global funding slowdowns. However, local investments showed resilience with a notable 2.4x increase from Q1 to Q2 2024, indicating growing investor confidence in the market.

Additionally, sectors such as regulatory technology (regtech) are experiencing significant growth. The regtech industry in Bangladesh is projected to grow by 33.9% annually to reach approximately USD 151.63 million in 2024. 

The process of forming a joint venture in Bangladesh typically involves several steps:

  1. Drafting a Joint Venture Agreement: This legal document outlines the terms of the partnership, including each party’s contributions, profit-sharing arrangements, and management responsibilities.
  2. Obtaining Name Clearance: Before registration, companies must secure a name clearance certificate from the Register of Joint Stock Companies & Firms (RJSC).
  3. Preparing Required Documentation: This includes the Memorandum of Association (MoA), Articles of Association (AoA), and any other necessary documents.
  4. Registration with RJSC: After submitting all documentation and paying the required fees, the RJSC will issue an incorporation certificate if everything is in order.
  5. Operational Setup: Once registered, partners can begin operations according to the agreed-upon business model.

Successful examples of joint ventures in Bangladesh include collaborations such as A.K. Khan-Penfabric Company Limited, which focuses on textile production with Penfabric Malaysia, and TM International Bangladesh Ltd., a significant player in telecommunications.

Licensing: Expanding Reach with Local Partners

Licensing is another viable strategy for foreign companies aiming to enter the Bangladeshi market. In this arrangement, a foreign company grants permission to a local firm to produce or sell its products under its brand name in exchange for royalties or fees. This approach allows businesses to expand their reach without incurring the costs associated with establishing a physical presence. The advantages of licensing include:

  • Lower Risk: Licensing minimizes investment risks as it does not require significant capital expenditure.
  • Rapid Market Entry: Local partners can leverage existing distribution networks and market knowledge to expedite product availability.
  • Brand Recognition: Licensing enables foreign brands to gain visibility in the market through established local players who understand consumer preferences.

Franchising: A Proven Business Model

Franchising is similar to licensing but typically involves a more structured relationship where the franchisor provides a complete business model, including branding, training, and operational support. This model is particularly effective in sectors like food and beverage, retail, and hospitality.

In Bangladesh, franchising has gained traction as a means for foreign brands to enter the market while maintaining control over their brand image and operational standards. Successful franchises can benefit from:

  • Established Brand Loyalty: Leveraging an existing brand can attract customers who are already familiar with it.
  • Support Systems: Franchisors offer training and ongoing support to franchisees, ensuring consistency in service and product quality.
  • Scalability: Franchising allows for rapid expansion with lower capital investment compared to opening company-owned outlets.

Nike and Adidas Franchising Bangaldesh, Shubhankar Consulting.

Export Agents- Become one!

In Bangladesh, export activities are governed by various policies and regulations, including the Export Policy 2021-2024 and guidelines set forth by the Bangladesh Bank. These regulations dictate the necessary documentation, compliance requirements, and procedures that must be followed to ensure successful exports.

For instance, according to the Export Policy 2021-2024, exporters must adhere to specific conditions regarding prohibited goods and conditional exports. Goods that are prohibited cannot be exported unless otherwise stated, while certain products may require fulfilling specific conditions before exportation. This policy framework is crucial for export agents to understand as it directly impacts their operations and the advice they provide to foreign clients.

Documentation and Compliance

Export agents must be well-versed in the documentation required for exporting goods from Bangladesh. Key documents include:

  • Export Registration Certificate (ERC): This certificate is mandatory for all exporters and must be obtained from the Chief Controller of Imports & Exports (CCI&E). The ERC process involves submitting various documents, including proof of business registration and compliance certificates from relevant authorities
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  • EXP Form: Before lodging this form with customs, export agents must ensure it is certified by an Authorized Dealer (AD). The EXP form is crucial for tracking export transactions and ensuring compliance with foreign exchange regulations
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  • Certificate of Origin: This document certifies the origin of the goods being exported and is often required by importers in foreign markets. Export agents must facilitate obtaining this certificate from competent authorities
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Facilitating Transactions

By acting as intermediaries, export agents streamline transactions between foreign companies and local buyers. They manage negotiations, logistics, and communication throughout the export process. This efficiency not only saves time but also reduces operational risks associated with entering a new market.

Building Local Networks

Export agents possess established relationships with local distributors, retailers, and customs officials. These connections are invaluable in overcoming barriers to entry and ensuring that products reach consumers efficiently. By leveraging these networks, export agents can help foreign companies navigate challenges that may arise during the export process.

Export Agents in Navigating Complexities in Bangladesh- Shubhanakr Consulting

Underlooked but Path Breakers

Local public relations (PR) is crucial for businesses operating in Bangladesh, a rapidly growing economy characterized by a unique cultural landscape and dynamic market conditions.

The Importance of Local PR

Local PR is critical for several reasons:

  1. Building Trust and Credibility: Establishing a trustworthy brand image is paramount in Bangladesh, where personal relationships significantly influence business decisions. Companies that engage in local PR efforts often find it easier to gain the support of local communities and stakeholders. For instance, a recent case study involving a multinational corporation showed that after implementing a local PR campaign focused on community engagement, they experienced a 40% increase in brand trust within six months.
  2. Cultural Relevance: Understanding local culture and values is essential for effective communication. Local PR strategies that incorporate cultural nuances resonate better with target audiences, enhancing brand perception. Research indicates that brands that adapt their messaging to align with local customs see up to a 30% improvement in customer engagement.
  3. Crisis Management: In an unpredictable business environment, having a robust PR strategy is vital for managing crises effectively. Local PR experts can help mitigate negative publicity and protect your brand’s reputation during challenging times. For example, a food company faced a product recall situation where their proactive local PR response led to a 25% recovery in sales within three months.
  4. Regulatory Navigation: The regulatory landscape in Bangladesh can be complex. Local PR agencies possess insights into regulatory requirements and can assist businesses in ensuring compliance while promoting their interests. This knowledge is crucial for avoiding potential pitfalls and maintaining a positive public image.

How S&C Can Help

At Shubhankar Consulting, we specialize in developing tailored local PR strategies that align with your business objectives. Here’s how we can assist you:

  • Comprehensive Market Research: We conduct thorough market research to identify key stakeholders, understand consumer behavior, and analyze competitive dynamics. This data informs our PR strategies, ensuring they are relevant and impactful.
  • Media Relations: Our established relationships with local media outlets enable us to secure positive coverage for your brand. We craft compelling press releases and narratives that highlight your achievements and initiatives, enhancing your visibility in the market.
  • Crisis Communication Planning: We develop crisis communication plans tailored to your business needs. Our team prepares you to respond effectively to potential crises, safeguarding your reputation and maintaining public trust.
  • Community Engagement Strategies: We help you engage with the local community through events, sponsorships, and corporate social responsibility initiatives. Building a strong community presence fosters goodwill and strengthens your brand’s connection to its audience.
  • Cultural Adaptation: Our expertise includes adapting your messaging to resonate with local audiences. We ensure that your communications reflect cultural sensitivities while effectively conveying your brand values.

Public relations - Shubhankar Consulting

01

Define Objectives

02

Primary & Secondary
Research

03

Market Trends
and Drivers

Market Assessment

04

Market Segment Analysis

05

Financial Projections

06

Develop Recommendations
and Implementation

Market Assessment

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