It's difficult to break into a new market, whether a whole other location with many considerations like culture, language, economy, or simply a new age group.
There are several potential threats and challenges to address with a competitive strategy like this. No business can anticipate and prevent every problem; thus, some degree of complexity is to be anticipated.
Profitable opportunities await businesses that can effectively minimize these threats. Businesses that prepare adequately for entering new markets have a definite competitive advantage over those who wade in unschooled. This blog will examine the advantages and disadvantages of bravely venturing into a new market. Up first: advantages.
In a time of economic uncertainty, business owners may wonder why they should try to enter new markets. This type of expansion represents the chance for unlimited potential success. It can be risky, but with proper planning and a roadmap from a trusted source, it can be highly beneficial for a business to expand to a new market.
Grow Your Customer Base
A company's customer base consists of all the people who buy the products or services they provide.
In an attempt to increase sales, businesses often do research about their customers to tailor their offerings better. Increasing a company's revenue can be tied to reaching a wider audience.
A client base may be considered a specific demographic or a collection of individuals with shared interests and are thus more likely to be interested in a given product or service. Customers that have their wants met repeatedly are considered repeat purchasers. These clients are likely to become frequent buyers of the business. These customers often serve as free marketing through word of mouth, provided they remain satisfied.
Some of the perks of growing your customer base:
1. Building More Customers in More Areas
Your business may have started as a small-to-medium enterprise serving one state or region. Expanding to serve the entire country or even the world, means you will access a new, enormous group of prospective customers.
2. Gaining More Awareness with New Potential Customers
Doing the work to expand into a new market means your business is set up to be a potential solution to the problems and pain points of your new audience. The information about your product or service helps them understand how you're different and can help solve their challenges.
3. Increasing Brand Recognition in a Broader Area
When customers can identify your business by its logo, slogan, or other types of branding, you have achieved brand recognition. For example, think about the iconic Shell sign for Shell gas stations or the "Just Do It!" slogan of Nike. Everyone is familiar with these. Seeking new markets will mean your brand recognition will increase, too!
Diversify Your Audience
Audience diversity can be in many different areas. If you have previously been laser-focused on a particular persona, like production techs, expanding to a new market might mean approaching procurement, management companies, or OEMs. Likewise, you might begin targeting different age groups, income groups, or geographical areas.
Find new customers and new personas to sell your product or service to
Identify new problems your product solves for potential customers
Likewise, your previous market research might have identified some of your customers' pain points. Still, a market expansion might uncover new ways your product or service can help people live better lives and achieve success.
Level Up Your Competition
In a world economy filled with ups and downs, being able to compete better against your rivals is a valuable reason to spread out into a new market. Adhering to a competitive strategy that helps you distinguish yourself from others is crucial.
Get a leg up on our competitors in your current market and offer a unique selling proposition (USP) in the new market.
Your USP can serve as a strong foundation for your marketing strategy. By spreading into new markets, you can find new ways for your company offers unique selling propositions to customers. You can appeal to customers' emotions and illustrate how you can solve their problems better than anyone else.
While it's clear that the competitive strategy of expanding into a new market can have many positives, it has its challenges. You may need help adapting your critical players to your new direction, your business to the increased needs of your expanding customer base, and your team to the increased workload.
Aligning Your Team
Ideally, when you decide to expand to a new market, your team is informed and prepared every step of the way. However, since humans are stubbornly resistant to change, you may have to do some selling to your team to help them understand the benefits of this step.
You must be communicative about why you are exploring a new market. Your team must understand how this will help the company and how each of your team members and departments will be a crucial piece of the puzzle. You must also make the new processes employees face fit seamlessly into their workflow. If you try to make drastic changes while keeping your cards close to your chest, you will undoubtedly face resistance from even the most cheerful of your employees.
Operational Growing Pains
One of the biggest challenges of expanding to a new market is the increased need for operations. Suppose you are opening another location for your business. In that case, you will need increased supplies to stock the new site, and you will need to decide whether you will have the supplies delivered to a headquarters or directly to the location.
If you expand your services to a new region or country, you must determine how your new clients will receive your product or services. You may have customs or other shipping challenges to learn. It's best to have a clear plan for addressing all potential plans before taking these steps.
Increasing Your Manpower
If you are increasing your customer base, you must increase your customer service efforts. For example, suppose you expect to have thousands more potential customers. In that case, you will need more than one team member to cover the many customer service queries you will begin receiving.
Your team should expand in proportion to the expansion of your planned customer base. You will need managers, shift leads, and employees to open a new brick-and-mortar location. If you run an online business and make parts, you will need more employees to handle orders and other customer service necessities.
Having a team that can handle all the new business coming your way will help your company earn that crucial competitive edge.
Weighing Your Options
It can be tough to decide whether or not market expansion is suitable for your business, but having the foundation to make it successful is crucial. Remember, success can lead to new challenges; create a plan to streamline your response as problems arise. For more tips on expanding into new markets and to create your custom market expansion plan, check out this article on fueling your business growth.