Market expansion is a growth strategy that aims to make a product or service available in new markets when existing ones get saturated. A market expansion strategy starts with analyzing existing and future channels of distribution and concludes with adopting measures to increase reach and sales in the markets of interest.
There are many ways to expand your market reach
Both domestic and international markets offer expansion opportunities. Expansion happens when existing markets reach their peak and new markets must be found. As a result, market expansion should lead to a growth in the consumer base for the business. Market expansion can take place via a variety of growth strategies:
Adding a product or service to the portfolio
If client or user feedback is good, the existing offer can be expanded to capture more revenue from the existing and potentially new audiences. Adding related products or value-adding products or services can serve as a viable growth strategy.
Launching existing products or services internationally
If the product or service has been widely adopted in the current markets, it indicates that the quality, usability, and necessity are proven. As a result, introducing the product or service into foreign markets globally can serve as a reliable growth strategy.
Adapting existing products or services for wider application
If client or user feedback generates requests for specific features, functionalities, integrations, or added value, it is an indicator that adding new features and capabilities should grow market reach. Products and services can also be expanded by finding new demographic segments or use cases for the products.
Planing market expansion
Market expansion starts with research. There might already exist indicators for growth in new markets based on client or partner feedback. This can be of essential help in narrowing the scope of research. If there is no feedback to start with, general market research, using surveys, focus groups, or narrow launch tests offer good starting points.
The research includes the analysis of potential new sectors, as well as geographic or economic regions that might embrace the product or service. This evaluation of beneficial factors and possible cross-sector application of the product or service will lead to a clear picture of the biggest growth potential.
The analysis would also include a SWOT (strength, weakness, opportunity, and threats) analysis with competitors in the new markets of interest. This analysis helps identify risk-benefit ratios for investment and logistical planning.
When deciding which markets are fit for expansion, an analysis of existing markets can serve as a benchmark. This would bring insights into the why and how peaks or near peaks have been reached in the existing market. Based on these insights, businesses can take measures to ensure the growth of the present consumer base is sustainable and successful.
With the results from analyzing the existing and potential new markets, cost-benefit, risk-benefit, and growth forecasting should take place as well. These final calculations, as well as the simulation of possible outcomes, offer an overview of how big investment the preferred market expansion would require.
The results should clearly outline if market expansion can be achieved by branching out into different geographic regions, or if the portfolio needs to be extended or adapted. With this information, a strategy for market expansion is built and a decision to move forward (or not) can be made. Tactical considerations for market expansion planning
After researching new markets, analyzing existing markets, and deciding on a suitable market expansion strategy, a diligent look at the tactical requirements for the planned expansion becomes necessary. Here is a list of questions that can help you recognize risk areas, growth curves, and timelines to take into account before putting the plan into action:
- Is the business well established in the current markets?
- Is there demand in other markets or sectors that you could cover?
Does the planned expansion require taking on debt?
- What are the biggest risks of failing in the new market?
- Has there been steady continuous growth with the existing products and services?
- Are you ready for slower growth curves with stable revenue promises?
- Which existing partnerships could support your expansion efforts?
- Which legal frameworks and business practices need to be taken into consideration for the market in question?
- Are new hires required?
- What is the long-term cost-benefit ratio?
These tactical questions, when answered, provide a detailed plan for entering a new market.
Choosing and implementing a market expansion strategy
Adding products or services to the portfolio is a natural step for business growth. Expanding your business internationally, on the other hand, can be a challenging process, but it bears the highest growth potential. Modern businesses often develop their products and services with an international consumer base in mind from the very beginning.
The previous research and analysis offered insights and simulations giving the business a clear picture of what to expect. When these are clear it is time to pick the best option and start implementing the strategy.
The implementation phase can include new hires, outsourcing, and additional support and logistic expenditures. All of these need to be in place before starting to prepare the launch into a new market. It may be that the product needs changes to adapt to cultural norms, linguistic particularities, etc.
If the decision is to opt for international market expansion, some additional aspects should be taken into account early in the process. After identifying the best new international markets for growth, businesses typically choose to adapt a specific expansion strategy encompassing localization.
Localization is one of the most important steps towards international reach. Adoption rates and conversion rates substantially increase when products or services are presented and marketed in the language native to the specific geographic region.
Localization is also the key asset to ensure a business feeds its new channels in a culturally appropriate way. After having determined these new channels, interest, engagement, and sales can only happen if the localized content reaches the target audience.
Implementing a successful international market expansion strategy
After having determined new markets, channels, and the portfolio items that should be adopted in these markets, it is time to look at a specific localization, marketing, and sales expansion strategy. During these steps, the collaboration of different departments is necessary and revolves around the localization process.
To increase collaboration between various departments and create a localization process that is transparent and clear for all staff involved, the use of a translation management system is highly beneficial. It allows for clear overviews and reports on the localization process. It also facilitates communication and clarity between the involved departments, while streamlining the translation process.
In addition, it enables the business to build up localization assets like translation memories and termbases, which can be fully or partially re-used in the future. These are assets that will help cut costs in the long run.
Localization is the foundation for successful marketing and sales strategies. These should be adapted to the specific cultural and social status quo of the target market. By implementing a solid localization, international marketing, and sales strategy, international market expansion turns into a comprehensive measure for growing a business.
Measuring the success of the market expansion
After implementing the expansion strategy and launching in the new market or expanding in the existing market, regular analysis of sales, conversion, revenue, and support data will help measure the success of the growth strategy.
In order to build a clear and reliable business case, specific metrics to be measured in regular intervals should be chosen carefully. These can be financially oriented, consider marketing or sales targets, calculate overall performance ratios, and more. Here, quality over quantity is key. Determining key performance indicators (KPIs) with the most useful forecasting and reliability potential provides benchmarks for future expansion efforts.