When a business reaches a point of stagnation, market expansion may be needed. However, it does come with substantial risk of failure. To anticipate this, determining the best strategy is crucial.
As part of business development strategy, market expansion should be done when a business reaches its peak saturation. This means that a business no longer has any “slice of the pie” to target as customers. There are various routes to market expansion; from opening new channels, creating new products or services to target a different set of consumers, to expanding its coverage of products or services. But the great risk involves failure in development, which would cost a company’s finances.
Business owners need to be aware of the consequences. Hence a robust preparation is necessary to ensure a successful market expansion. Below are the steps to note.
1. Build Strategy Details
Before executing market expansion, business owners need to start with building a detailed strategy. A lot of factors need to be laid out; reasons for executing the market expansion, why this step is decided to be necessary, and the new market it plans to target.
It is of high importance to detail every facet. For example, in regards to the potential market a business is targeting. A breakdown of buyer persona and the correct approach towards them must be prepared. A complete understanding of the potential consumer market’s demographics becomes very vital.
Once all details are set, a business should share and refer them to other related parties. They can provide feedback and assessment to strengthen the strategy.
2. Prepare the Financing
Market expansion will need significant financial support. Its financing must be prepared as best as possible. Formulate the total cost needed, then calculate the possibilities for recovering the cost through revenue and eventually turning a profit. How? — what ways can be done to achieve this; and when? — in what period of time can the business recover costs and turn the profit.
In this calculation, the newly targeted market should present its own financial benefits. Therefore, in long term planning, there should not be any need of support from previously established businesses or markets.
3. Prepare the Sales Channel
A new market can be gained through the correct sales channels. So a business should promptly prepare these channels, such as offline stores or websites that will enable customers to make purchases online.
Whatever the sales channel, business owners must consider them suitably. Decide on whichever is deemed most effective to interact with consumers and assist during market expansion. Combining various channels is also an option, as this can be an anticipatory step in the event that not every channel performs well.
4. Build Customer Relation with the New Audience
Start by initiating contact with the audience in the new target market. Customer relation has to be built properly. Business owners must plan ways to build optimal interactions.
In relation with expansion to a new market, the message being conveyed must correspond with the value proposition being offered. A business should highlight the benefits of its products or services, and its superior proposition compared to competitors.
As these are new audiences and potential consumers, originality in communication and quality in customer relations are crucial. Businesses are demanded to interact with their customers at their very best.
5. Develop the Brand
When developing a brand that has previously been known to the public, there are various data points to gain insight from. A business should identify those points, such as analyzing interaction results with the previous audience. It is also possible to persuade that audience to spread the word of the new product.
In developing the brand, balance communication by targeting those who have not had previous interaction with the business. However, execute carefully and stay aligned with the determined target market.
6. Increase Product Sales
A business should aim to boost sales in the new market. This can be achieved by beginning to assess previous sales data points. From there, new and specific methods can be developed to increase sales level.
However, as it is a new market, the business focus should be in strengthening positioning in the eyes of potential consumers. To begin with, revenue should not be the priority objective. It is important to see market expansion as future investment.
To cement positioning, a business can execute programs that emphasize the product’s superior value and unique propositions. Examples include:
- Referral programs
- Product contest
- Special price
- Special events for customers
- Discounts for a certain period of time
7. Build a Firm Foundation
Finally, once all above steps are done, a business must build a strong and secure foundation for the market expansion. Monitor all progress and achievement, then evaluate them for further development steps.
When necessary, strategies need to be adaptable. Renewal of strategies may even be undergone if the target market demands it. As the strategies adapt and change, the main objective remains: a firm foothold in the new market.
Market expansion is a different kind of adventure compared to the previously established ventures of a business. As such, business owners have to prepare as best as possible to minimize risks and failures.