Market Penetration and Acquisition Strategies for Emerging Economies

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Market Penetration and Acquisition Strategies for Emerging Economies

Klaus E. Meyer Professor of Business Administration Box 218, University of Reading Business School Whiteknights, Reading, Berkshire, RG6 6AA, UK

Yen Thi Thu Tran PhD Student Copenhagen Business School Kilevej 14 A, 6., 2000 Frederiksberg, Denmark

This version: 25 January, 2006

Please refer to the published version of this paper when citing:
Meyer, Klaus E. & Tran, Yen Thi Thu (2006): Market Penetration and Acquisition Strategies for Emerging Economies, Long Range Planning, 39, no. 2, 177-197.

Acknowledgements: We thank the Social Science Foundation (SSF) Denmark for sponsoring this research as part of the MASEE project (grant
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As Dawar and Chattopadhay 5 outline, emerging economies comprise very diverse groups of customers that may have to be targeted with different products, brands and even business models. Consequently, potential entrants face tradeoffs between developing a global brand for the premium segment, where substantive margins can be earned, and developing products with large-scale and cost-efficient production for the mass markets and earning profits through volume. International marketing scholars debate the trade-offs of global standardization6 and local adaptation7 in emerging economies. In addition to global or local brand strategies, many MNEs combine them in a multi-tier strategy that aims to reach both the mass market and the premium segment. We argue that this strategy may be particularly suitable for emerging economies where the large distance between the premium and mass markets is typically big. However, the appropriate strategy depends on the nature of the investor’s resources. Market penetration starts with the entry strategy, which has to provide access to local resources, such as distribution networks and access to local businesses and authorities. In emerging economies, investors have to think beyond the conventional entry modes of Greenfield, acquisition and joint venture (JV). We introduce a more differentiated
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