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6 Min. Read

Market Expansion Strategy: A Complete Business Guide

Market Expansion Strategy: A Complete Business Guide

No business exists to simply tread water and keep things the same. In fact, a company that tries to do so will find itself falling behind its competitors.

Instead, every company needs to look for opportunities to expand its market. This can’t be done recklessly, but with the right research, you can minimize risks and help increase the chances of success.

What is a market expansion strategy, and what are some techniques you can use to maximize your success? Let’s take a look.

Here’s What We’ll Cover:

What Is Market Expansion?

How to Create a Market Expansion Strategy

The Benefits of a Market Expansion Strategy

Is it Time For a Market Expansion?

What Is Market Expansion?

Market expansion happens when you notice that your current market share has peaked and you aren’t gaining any additional customers in your current niche. The goal of a market expansion strategy is to allow you to sell your current products or services to a new market.

Once you have met the current market opportunities, it’s time to determine what other markets are reachable. Think about what types of people might benefit from your product or service that you aren’t currently marketing to. As you identify these new customers, think about the problems they have and how you can solve them.

After you’ve decided on a target market for expansion, think about how to create messaging that resonates with that group so they understand that your offer is relevant to their needs.

Market expansion is an essential part of business growth. Very few companies can stay in a single niche forever and still have significant success. That’s why creating a strong expansion strategy is vital.

How to Create a Market Expansion Strategy

There are several steps to creating a successful market expansion strategy. The first step is to understand why you want to expand. Are you trying to increase profits to a specific level? Do you want to overtake a competitor? Knowing your goals will help you define your strategy.

Identify Your New Market

Once you know your goal, think about what markets you could reach that you aren’t currently focused on. Have your front-line customer service representatives heard from a unique customer base you weren’t expecting?

For example, Dollar Shave Club sells razors through the mail, and their initial marketing was very directly aimed at men. However, many women enjoyed using their products as well. If they wanted to, Dollar Shave Club could create a market expansion strategy by specifically targeting women with their marketing and products.

Once you’ve identified a potential target market, start researching how to connect with them. Where do those people spend time — online and off? What keeps them up at night?

With this information, you’ll be ready to create your specific outreach strategy.

Create a Plan For Targeting the New Market

A marketing plan has a variety of parts. You’ve already taken care of the first one with your market analysis. Now it’s time to create the messaging, voice, and schedule for your outreach. You should also take time to see how competitors are reaching this market so you can create ways to stand out.

Your marketing plan can include information on social media campaigns, a new website or web pages, advertising online and off, email marketing, and much more. However, make sure the plan makes sense given the current commitments your staff already have.

Reaching new potential customers can be a tricky process, so make sure you consider a variety of approaches. Focus your efforts on where your potential markets spend the most time and make sure your message is very personalized to your target market.

Approve a Marketing Budget

The best cars in the world won’t run without fuel, and the best marketing plans can’t go anywhere without a budget. If you’re a business owner it’s easier to create and approve a budget than if you work in a larger company.

You may need to create a formal proposal and present it to your company’s leadership team, or you might be able to have an ad-hoc leader’s meeting with your top staff. It all depends on the structure of your company.

Remember that your initial marketing efforts won’t bring in revenue right away, so have a reasonable and specific timeframe that you can commit to funding your new outreach. If there are no results at the end of that period, it may be time to reevaluate the strategy.

Take Action & Track Results

Now that you’ve created your market expansion plan, it’s time to take action. Start your outreach to the new market segment and see how things go. It’s important to track your results so that you can determine what types of marketing make a difference in this niche and what types you can move away from.

As you track your results, you can shift your time and financial focus toward strategies that deliver the best return on your investment (ROI).

The Benefits of a Market Expansion Strategy

Why do companies pursue market expansion as a form of growth? There are a lot of benefits that your business can gain from expanding your market.

First, expanding your market to specific niches can help you manage your company’s cash flow by marketing your products and services to those who are most likely to buy. You also create messaging that fits that exact niche, rather than broad marketing that may not appeal to anyone. This is far better than blindly trying to appeal to everyone — which appeals to no one.

Secondly, by creating a solid plan and budget, a market expansion strategy helps reduce the risks of business growth. Because you’re growing one niche at a time, after your current reach is maximized, you aren’t overextending your company. You’re also ensuring that you maximize the profit of each expansion before pursuing another.

Finally, market expansion helps your company avoid stagnation by consistently looking for and creating a plan to reach new market niches. This helps your company be much more successful over time and keeps you from falling behind your competition.

Is it Time For a Market Expansion?

Is your business ready to expand into a new market? If so, this guide will help you create a solid strategy without leaving your current market behind.

One of the things that FreshBooks can help you with is managing your company finances as you grow. If you’re ready for an easy-to-use accounting and invoicing system, we’re here to help. Check out our Resource Hub for more articles like this.