Even in an uncertain global economic environment, growth is still the name of the game for today’s enterprises, and one of the surest ways to unlock new opportunities is via market expansion. By making a product or service available in new markets when existing ones get saturated, companies can tap into new revenue, new audiences, and new potential avenues for future growth.
To ensure a successful expansion, companies need a market expansion strategy—a detailed plan to help minimize the costs of entry, avoid potential obstacles, and identify hidden opportunities within a market. Let’s take a look at the six key steps for building a successful plan.
Define goals and objectives
A key first step to developing a market expansion strategy is to define your overall goals and objectives for entering new markets. Goals could include accelerating the company’s growth rate, preventing competitors from capturing market share, or reducing costs by setting up in cheaper markets.
Once you’ve set your goals, develop objectives for each. For example, how much market share do you want to capture? How much revenue do you need to bring in each month? The more specific you are, the easier it will be to track progress and adjust as you go.
Build a strong team
A market expansion is a team effort, and the person responsible for creating your strategy should be someone in a cross-functional role who has strong relationships with leaders and is familiar with all parts of your business.
Getting buy-in from the full executive team—those individuals who must then sell the idea throughout the company—is essential for success. It’s also important to address doubts and concerns early and directly so that everyone working on the market expansion is aligned toward a common vision.
Conduct market research
The next step is to conduct market research to understand the new market. Classic Market Orientation research is needed to understand the competitive, customer, and company situation around important questions, including the following:
- How should we segment the market?
- How should we position for optimum success?
- How much would customers in the new market be willing to pay?
- What cultural differences might influence consumer behavior?
- What messaging should be used in the new market?
The market research process acts as a localization discovery phase, helping you understand how you can best connect with local consumers. By gathering as much information as possible, you’ll be able to create a strategy and plan that is tailored to the needs of the new market.
Create a financial plan
After conducting your market research, it’s time to create a detailed financial plan, starting with cost analysis and budgeting. Expenses to consider during a market expansion include the following:
- Staffing costs
- Market research
- Product development
- Marketing and advertising
- Sales and distribution
- Customer support
- Overhead costs (e.g., office space, equipment, tools)
With expenses understood, create a sales forecast for the first few years to determine how much revenue you can expect and when you can start to turn a profit. Once you’ve outlined this information, it’s time to create your budget—which should include a buffer for unforeseen costs and challenges.
Learn from your competitors
Another step to not overlook when crafting a market expansion plan is a competitive analysis. By evaluating your competitors’ strategies, you can better anticipate obstacles they might pose. Consider:
- What market segments are they targeting?
- What messages are they using to attract customers?
- What feedback have they received from customers?
Integrate localization from the start
Finally, but probably most importantly, it’s important to integrate localization from the very start of your market entry process. Remember that localization isn’t limited to the language of your products or services—it can also include cultural aspects, such as how products are designed or how customer support is delivered or how your advertising/content is tailored.
There are several types of localization that executives should consider, including:
- Product localization (includes translating software or website content, as well as implementing localization-aware development practices)
- Marketing localization (creating content that is relevant and engaging for local audiences)
- Sales localization (ensuring sales materials are translated and sales staff are trained on how to properly interact with local customers)
Successful market expansion in action: Netflix
If you want a great example of a company that has successfully expanded into new markets, look no further than Netflix, which began its international expansion in 2010 and is now available in more than 190 countries.
When tapping into new markets, Netflix has invested heavily in localization, translating its content into more than 60 languages. By carefully localizing its user interface and tailoring its marketing campaigns, Netflix has been able to provide native-feeling user experience and quickly gain a foothold in these new markets.
Not every company has the range and resources of Netflix, but the company’s success highlights how important it is to have a strong market expansion strategy. With enough planning and preparation, any business can find rich, unexpected opportunities in new markets.
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