Waterfall market entry strategy is sequential business expansion to foreign markets. Its main characteristic is the use of clearly defined entry stages and the sequential use of experience: the knowledge obtained during one stage is used to enact the next one.In106 this case, each stage is represented by a single foreign market. First, a company enters one foreign market, establishes itself, promotes the product and builds a client base. When the company feels comfortable in this market and its position is stable, the business can be expanded into the next market, using the previously gained knowledge. This reminds of a multi-layered waterfall, where water passes through each stage before it reaches the final destination, hence the name of the market entry strategy.
The waterfall market entry strategy is best suited for companies, who produce products with a long life cycle or whose products are in the maturity phase. As the waterfall market entry implies longer time of establishing and building up a client base, long life cycle ensures that the product is not removed from the market before the prospects of the business are stable. A product in the maturity phase, on the other hand, ensures that by the time a company enters a foreign market, the product is ready to be sold. If it gains enough popularity, the product's life cycle across all the markets will be prolonged.