Expanding into a new market is an excellent way to increase sales for your current line of products and services. However, it's important to approach the initiative strategically to minimize risk and maximize the likelihood of success. Learning how to develop a market expansion strategy can help you accomplish just that.
What Are Market Expansion Strategies?
A market expansion strategy is a growth strategy that involves selling current products in a new market when growth peaks in the company's existing sales channels. Being able to successfully employ market expansion strategies first requires your company to have fulfilled existing markets. Then, your company needs to identify the other markets that are reachable.
In order to expand into new markets, your company must first evaluate its capabilities and assets. This could include launching either new or existing products into new channels where there may be appeal. Then, you must identify the new customers and create messaging that resonates with them.
Your organization also has to finance these new initiatives. Because no sales expansion strategy guarantees success, your company has to accept the risks that come with any new initiatives. If the market expansion strategy succeeds, though, there will be an increase in sales and profitability company-wide.
How to Develop a Successful Market Expansion Strategy
Here are the steps you can take to create an effective market expansion strategy for your business:
1. Create an Overview
In order to create a successful market expansion strategy, you first need to identify why you want to expand. Start by writing down your reasons for wanting to expand. Identify the new market you want to pursue and why you think expanding into that channel is a winning strategy.
Create buyer personas for the individuals or businesses that your products and services would most appeal to, and explore how you plan to reach them. Identify the marketing channels that you can use to reach them, whether it's by getting your products into stores, targeting them using advertising on social media or pay-per-click ads, or some other strategy.
When you're done summarizing your strategy, including who you will target and how you will expand into the new market, it's time to create a formal proposal justifying the strategy. It's always important to earn the support of partners or executives who can offer insight and an additional perspective.
2. Develop a Financial Plan
After earning the support of executives, co-founders, or partners, it's time to explore how you will finance the market expansion strategy. Start by identifying all of the expenses that will accompany the market expansion. Itemize the individual resources you will need for success and how long it will take for the new initiative to be profitable. You should treat this new initiative like its own business, which should be able to support itself financially within a reasonable amount of time so you can regain your initial investment.
3. Expand into new channels
Once you have a plan and know how you will finance the new initiative, it's time to expand into new channels. These channels are the pathways you will take to bring your product or service to the audience you're targeting. There are a variety of different channels you could use, such as selling your products through retail outlets or by using digital advertising and selling online. Expanding into a new market using the right channels is critical for engaging your new customers effectively and being successful with the new initiative.
4. Engage new audiences
To successfully engage your audience, your marketing strategy should include various marketing components, such as the value proposition that your product or service offers. Your efforts should focus on positioning your company as being authentic and on producing high-quality products. Recognize that traditional metrics, like website traffic, may not be an authentic representation of success.
5. Focus on brand growth
Take what you learned from your initial engagements with new customers and build upon it. Identify their primary motivations and habits. By better understanding the habits of these new customers, you can often identify other potential customers who have the same motivations and behaviors. While you do want to target specific types of buyers, the ultimate goal is market saturation.
By creating a compelling marketing message that appeals to a broad audience, you should be able to attract new customers who you have not even considered. While it can be challenging to find a balance between messaging that is targeted and messaging that has broad appeal, you should ideally create a single message that accomplishes both goals. If you want to test different messages, you should try them on different platforms. However, it's important to remember that one of your buyer personas could see an ad meant for another. This is why it's critical to maintain consistency in your messaging as much as possible.
6. Increase sales on existing products
Your initial goal should be to test one or more of your existing products to evaluate how they perform in the new market. You can use the feedback you received from customers in other markets to create messaging for those products in the new market you're entering. Develop a strategy where you deliver value and minimize the effort and cost customers have to invest to get it. Some strategies you could try include:
- Short sales that offer generous discounts
- Special events that deliver maximum value
- Referral programs
- Contests and giveaways
7. Introduce a line of new products
As part of your market expansion strategy, you may want to consider exploring additional revenue opportunities through new product development. If you intend to invest in new product development, you should start by identifying a need in the market that you could solve with the help of your new product. Once you have developed a concept for the new product, you can then assign a development team.
You may want to consider involving your customers during the design phase, as this can help you to provide a solution that better meets their needs, which should ultimately lead to more sales. You can interact with customers using a web portal or over social media. In addition to helping you remain focused on the benefits to the end-user, they can also help you create a product name that resonates with them.
Tips for a Strong Market Expansion Strategy
With a strong market expansion strategy, you can keep your business growing, regardless of what's happening in the economy. Here are some tips you can use to develop one for your own business.
Conduct In-Depth Market Research
If you're considering launching a new product into the new market, start by conducting in-depth market research before committing additional resources. By starting with research, you can feel more confident about the success of the new product or service. You can also find out how much customers would be willing to pay and whether that would allow you to be profitable after production and delivery. By doing market research upfront and determining the break-even point, the point at which your total cost and total revenue will be equal, you can determine whether you should move forward with developing the new product.
Increase Sales for Current Products and Services
Examine your current customer base to identify the segment that would be most willing to buy more from you. You can accomplish this by establishing different customer groups and examining their buying history as well as demographics like age and gender. By doing this, you can modify your marketing messaging so it better appeals to this segment. You can also focus the majority of your marketing efforts on this customer group in order to increase sales and revenue.
Learn From Your Competition
Identify your major competitors in the different markets, and monitor their activity to see what they're doing online. You can often learn a lot from your competitors, especially if you're still learning about your new target audience. Observe the way they interact with customers and the messaging they use. Take what you can learn from it and apply what's relevant to your own business.
Maximize Online Opportunities
There are a wide variety of places you can advertise online, including social media platforms like Instagram and Facebook. You may also want to consider using search engine optimization (SEO) strategies to improve your website's ranking in the search engines. By using a well-designed website with strong messaging that emphasizes the key benefits of your products, you can maximize on all online marketing channels.
Invest in Market Expansion
When you're ready to invest in your market expansion strategy or in new product development, check out SmartBiz Loans. We offer exceptional customer service and an easy application process to get you the best financing at the lowest cost to meet your needs. Our professionals use our unique platform to match your application with the bank that is most likely to fund your market expansion initiative, increasing the likelihood that you will receive the funding you need. In fact, about 90% of our applicants get funding. Use this convenient tool to learn if you pre-qualify.
