The sprinkler strategy (also known as sprinkler diffusion strategy) is a
market entry strategy
Market is a term used to describe concepts such as:
*Market (economics), system in which parties engage in transactions according to supply and demand
*Market economy
*Marketplace, a physical marketplace or public market
Geography
*Märket, an ...
based on the principle of diversification in which a company attempts to enter as many markets as possible in a relatively short time.
A successful implementation of the sprinkler strategy requires a high standardization of marketing activities due to the extreme difficulty implied in the simultaneous maximization of marketing activities' customization and of the number of successful market entries. Usually, a certain amount of failed market entries and withdrawals from some markets is accepted if a sprinkler strategy is used. In case a
waterfall strategy and a sprinkler strategy are used together, this yields a combined waterfall-sprinkler-strategy.
[Schmid, S. (2006): ''Internationales Management'', 5th ed., München-Wien-Oldenbourg.]
Advantages and disadvantages
''Advantages'' of the sprinkler strategy are:
* Once a market is successfully entered, its
market entry barriers work against potential followers (
first-mover advantages).
* The risk associated with multiple simultaneous market entry attempts is distributed regionally (
risk diversification).
* Entering multiple markets simultaneously is likely to result in a high volume of sales which is beneficial with respect to
capacity utilization
Capacity utilization or capacity utilisation is the extent to which a firm or nation employs its installed productive capacity. It is the relationship between output that ''is'' produced with the installed equipment, and the potential output whic ...
.
* By achieving market entry in multiple markets the company makes full use of its competitive advantage.
* Multiple simultaneous market entries in foreign markets allow for a more rapid development of international markets.
''Disadvantages'' of the sprinkler strategy are:
* A successful implementation of the sprinkler strategy incurs a high need for many financial and personnel resources in a very short time frame.
* If too many market entries are unsuccessful and the strategy fails, major losses to the company are highly probable.
* There is less or no opportunity to learn from earlier market entries and apply the lessons learned when making later market entries.
References
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Sources
* Kuester, Sabine (2012): ''MKT 401: Strategic Marketing & Marketing in Specific Industry Contexts'', University of Mannheim.
Business terms