Expanding into new markets is a great way to grow your business and reach new customers. However, it’s essential to do your research and plan carefully. So before we leap oceans here, let’s unpack what needs to be considered in an expansion marketing strategy.
“Entering a new market comes with risk,” said Laura Patterson, author of “Fast Track Your Business.” “To offset the risk, it’s vital to have clarity based on data regarding customer needs and wants and the degree of competition. Some of the first critical steps are to conduct research to validate the market, estimate the cost of entry, gain insights to define and establish a unique and compelling value proposition and support a go-to-market strategy and plan.”
Because of all those reasons, there’s work to be done. Let’s discuss how that can be achieved, including:
- Understanding the need for market expansion
- Identifying potential new markets
- Conducting market research in the target markets
- Developing a market entry strategy
- Implementing and monitoring the expansion process
Understanding the need for market expansion
Expanding into new markets often enters the discussion when companies see the opportunity to grow in other verticals or geographic areas.
- Increased revenue by reaching new customers.
- More brand awareness by reaching new people.
- Increased market share by gaining a foothold in new markets.
- Diversification by reducing reliance on a single market.
Geographic example: A market research firm might have started in Europe and now wants to expand into North America. It can make sense as the cultures are similar enough. If a product or service works in Europe, it also has a chance in the United States.
Vertical example: For one reason or another, an MR tech firm started working with companies in specific industries. But people in other industries could also use the product or service, so the company is looking at expanding into a new industry.
One of the best strategies for entering a new market is to leverage the ecosystem. An ecosystem refers to the network of buyers, sellers, influencers, channels, and supplier members.
– Laura Patterson, author
Identifying potential new markets
Not all markets are created equal. Some markets are more ripe for expansion than others. When choosing a new market, you’ll need to consider factors such as the size of the market, the growth potential, and the level of competition.
That’s one reason expansion into the United States is often considered in the market research space: The landscape is huge and ranges from teams at large consumer packaged goods companies to startups across 2,000-some miles spanning coast to coast.
But before entering any new geographic market, these steps are essential:
- Who is the competition? When expanding into a new market, it is important to understand who your competitors are and what they are doing. This includes things like their products or services, their marketing strategies, and their pricing.
- The importance of cultural research. It is important to understand the cultural nuances of that market. This includes things like language, customs, and values. Failing to do this can lead to cultural clashes and misunderstandings. Understand the people in the new market.
- The need for a strong localization strategy. This means adapting your products, services, and marketing materials to the specific needs of the new market. This includes things like translating your content into the local language, using local imagery, and understanding local buying habits.
- The importance of building relationships. It is important to build relationships with key stakeholders in that market. This includes things like partnering with local businesses, networking, and attending industry conferences.
- The need for patience. It is important to be patient and persistent and not to expect overnight success.
Conducting market research in the target market
This certainly is no surprise to any company in the market research industry, but it’s essential to understand a market before expanding into it. That can be accomplished through:
- Calculating the total addressable market (TAM) through a market sizing exercise to determine if the potential growth is worth the effort.
- Formal research projects in the new market to see how people react to the product.
- Researching how other similar companies have successfully expanded into the same market.
- Conversations and partnerships with advisors like Growgetter who have helped companies with international expansion marketing.
Developing a market entry strategy
“If we want to succeed globally, our product must engage customers worldwide in their culture and adapt to their preferences,” said Miguel Sepulveda, Globalization Director, author of the Blog yolocalizo.com and Researcher at Nimdzi. “It’s never too early to plan for localization. While designing your product roadmap, consider these key steps to run in parallel while the development of the product is happening.”
it’s essential to have a good plan and steps in place to determine what you need to do and when. That includes:
- Understanding of the new target customer and how they can be reached
- Resource planning:
- Who will do what in the new market
- What’s the cost to go to market with marketing, sales, and other personnel and strategies
- Determine your customer acquisition cost based on the current go-to-market strategy and determine feasibility
Be realistic about costs and results. Overnight success is not a thing, and expanding into new markets can increase costs, which at some point will have to be outweighed by new revenues.
Implementing and monitoring the expansion process
Consequently, it’s important to have a realistic timeline of how long it should take to see success or indications of future success. Monitor the progress closely, adjust when necessary – without overreacting – and keep an eye on what’s working.
But also don’t over- (or under-) engineer it.
“So on the one hand, people think that they have to just completely globalize the entire experience, every single little thing on the website,” said Hilary Atkisson Normanha, internationalization expert at Spotify, on the “Inclusion and Marketing” podcast. “And if they don’t do that, it’s not good enough, and they can’t enter the market. And that’s simply not true. So that’s one mistake that I see people make. And then some swing to the completely other side and they’re like, we’ll just Google translate the whole thing. You have to find that happy medium.”