The strategy of market expansion is by no means reserved for giants. For many companies, expansion the market will simply occur on a smaller scale. Still, some of the most sophisticated and effective strategies come from small businesses. What must distinguish each of them is uniqueness. An expansion strategy must always be unique. How will it work for you?
What is the market expansion strategy?
New opportunities will appear in new markets. Firms should be able to identify them and take timely action accordingly. It is important to distinguish between real opportunities and challenges. The market expansion strategy is based on discovering new customers and arousing the need to buy from more people. New target group, new applications for existing products and new distribution channels - that is what it focuses on.
The market expansion strategy is one of the tactics used to develop business. Companies adopt it when they reach their peak growth. How to measure it and how do you know it has occurred? Success depends on confirming that the company has achieved everything it could in the current market. If it wants to grow further, it has to identify other markets to which it can reach. It can generally do this in two ways: by selling more of an existing product or by selling new products.
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The company, by researching potential markets, must assess its capabilities and assets. What is its advantage? What areas that can constitute sales supportremain unused? What communication channels will help you reach potential customers? The company also needs to consider who the new customers are. Then, he can involve them in a specific brand message.
Possibilities of a market expansion strategy
The answers to the following questions will help you determine whether it is worth considering this strategy in your company:
- Which markets are you currently reaching?
- What other markets exist for your products / services?
- Which potential markets are the easiest to reach?
- Which potential markets offer the greatest sales and growth opportunities?
Consider which markets are easiest to reach based on your knowledge, experience and contacts. A property management company that purchases, remodels, sells or rents apartments for renovation has carefully scrutinized its markets. Recognizing that she can also use her knowledge and skills on commercial real estate, she started to buy older office buildings, rebuild them and rent office space. Many companies from many industries are achieving further success when implementing an expansion strategy.
An example of an expansion strategy
In 2008, Airbnb was founded - a social market where people can exchange and book accommodation all over the world. In 2015, the website introduced an innovative strategy of market expansion. It started with the hashtag: #OneLessStranger and an altruistic campaign that the company described as "a global social experiment." As part of it, Airbnb asked the community belonging to the platform to make various polite gestures towards their guests, and then take a video or photo with them and share it using a hashtag. The adopted expansion strategy turned out to be a great success.
Since January 27, in the 3 weeks after the campaign began, more than 3 million people around the world have become involved by creating entries from #OneLessStranger and posting them online. The campaign was distributed only on social media. Airbnb is successful because it knows its customers - people who are empathetic and sensitive to the needs of others. The genius of the campaign is how they got them involved. The altruistic challenge inspired ordinary people around the world to spread good through small gestures.
Types of market expansion strategies
There are several different ways to increase your market share. One of them is the strategy of expansion through concentration. Companies then invest in specific resources - e.g. proven products. By using the strategy market penetration, the company can focus on an existing market or expand it to new customer segments. It can also offer new products to an existing customer base. Then the goal is to develop a new product - from idea to market launch. Such an expansion strategy requires first determining the needs in the target market that the product will meet. Existing customers can be successfully involved in this. The expansion strategy also takes place through mergers, acquisitions and strategic alliances. In this way, two companies can combine their competences, resources and abilities, expecting mutual benefits.
Planning an expansion strategy
In the business world, change is inevitable, but growth is not. Company development it always depends on the strategy and actions the organization takes to make it happen. The degree to which it implements the market development strategy depends to a large extent on the company's business objectives. You can plan to grow your business slowly so as to maintain a small but manageable market share. Or you can develop an aggressive growth strategy that forces you to establish a more flexible organizational structure that can adapt to new markets and rapid growth. However, an expansion strategy always requires planning. The implementation of the assumed plan is fundamental to a successful business venture.
Planning and achieving market growth requires the use of certain basic marketing activities and techniques. They are carried out in the following steps:
1: Defining new target markets
2: Conducting a market research
3: Entering the market or looking for a different target market
4: Develop a go-to-market plan
As products, services and customers are different everywhere, the company will have to adapt these steps to its own needs and activities related to market expansion.
Your business market, like everything else, will change over time. As your business matures and your market share continues to grow, you will likely start to encounter growth constraints in your original target market. If a firm does not find new markets for its products, it cannot increase sales or profits. Planning and implementing a growth strategy to expand new markets and expand your business before the current market flattens will not only help your business get through tough times, but can also provide you with a significant competitive advantage.