Market expansion is one of the strategies you can adopt to grow your business. What exactly does that mean? How best to prepare? Here are the answers you were looking for. You have increased sales, extended your product line, and established your product or service in your target market.
Another strategy to grow your business is market expansion. It is an extremely demanding operation that should be taken seriously and requires an accurate preparatory phase. We understand what market expansion means and some essential steps to expand your company into a new market successfully.
What Does Market Expansion Mean?
Market expansion (or development) is one of the four hypotheses identified by the Ansoff matrix and consists of proposing your current product to a new market. You can present a product that has yet to have positive feedback in your target market or one that, precisely because of its success with your current customers, you want to try out in a new context. You can research the new market:
- in a geographical sense: going from local to national or marketing abroad;
- In different industrial fields: presenting your product to a new target of another sector or nature from the one you usually work with; for example, if you have always proposed your offer to B2C through market expansion, you can go on to operate in B2B.
How To Prepare For Expansion
Here are some things you need to pay attention to expand your business into a new market successfully.
Locate The New Market You Want To Enter
Before expanding, you must know the market you want to enter. In particular, try to understand the following:
- The trend: whether the market is growing or falling;
- Possible cyclicality: if the market faces cyclical movements, which tend to repeat themselves with a certain frequency and which significantly influence the price trend;
- Barriers to entry: what are the elements that could hinder your entry into the new market;
- The competitors: who they are and what characteristics they have;
- The question: who are your new potential customers, and what are their needs?
Market research can help you considerably in this phase. Due to their importance, we advise you to contact specialized professionals who can use their experience to provide an objective and impartial analysis of the possibilities for expanding your business into new markets.
You can join a franchise or buy/lease an existing business on the market. It’s a quick way to enter the market but it can come with high costs.
You can rely on a distributor or a sales network already on the market and present with other businesses at a local level. However, this leads to low-risk margins at the expense of a lower control capacity. Collaborations of this type must be chosen carefully and based on the reciprocity of trust and transparency. You must know how to explain the potential and advantages that your product can express in that given market so that they know how to communicate its value.
Make Sure You Have All The Necessary Resources
To name the most important elements, your expansion must be supported by the right amount of capital, a well-rounded and trained team, adequate production lines, and efficient logistics and distribution. If you don’t have the necessary resources, wait before taking action.
Develop An Effective New Market Launch Plan
Do you have all the information and resources needed to enter the new market? Well, it’s time to come up with your launch plan. Entering a new market is similar to opening a new business, so you have to consider the project a real business plan. Make sure your plan is tailored to the market you intend to enter. It must include how you will evaluate the operation’s success, at what price to offer your product or service, your financial strategy, and your sales and marketing activities.
Train Your Team
It would help if you prepared your team for the new market’s ins and outs. Establish a training program for your employees to keep up, or consider integrating your team with new resources and work with them to develop specific processes aimed at the new market.