Expanding into new markets is a great way to grow your business and reach new customers. However, it’s essential to do the right research and plan carefully. So before we leap oceans here, let’s unpack what needs to be considered in an expansion marketing strategy. In other words, how to expand business into new markets in the best possible way.
“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
- Understanding cultural differences and nuances
- Using personas to understand the target buyer
- Technical and legal considerations
- Specific go-to-market strategies
- 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.
Benefits include:
- 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 to expand 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.
“Make sure you do your research and understand actually what your brand awareness is in the market that you’re going to,” said Kristin Luck, co-founder of Growgetter, in a webinar on the topic.
The strategy on how to expand business into new markets
“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. “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
Calculate now how your expansion marketing budget should be broken down
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.
“It’s never too early to plan for localization,” said Kristin. “While designing your product roadmap, consider these key steps to run in parallel while the development of the product is happening.”
Understanding cultural differences and nuances
It’s crucial to understand the cultural differences and nuances when expanding into new markets. This includes things like:
- Communication styles – how direct or indirect people communicate, use of exclamation points, nice words, etc.
- Greetings – how many cheek kisses when greeting someone, exchanging business cards, etc.
- Colloquialisms and language differences – certain words and phrases may not translate or have different meanings
- Values and customs – understanding what’s important to people in that culture and market
Failing to understand and adapt to these cultural elements can lead to misunderstandings, offending potential customers or partners, and struggling to connect with the new market. Invest time in learning about the culture, ideally from locals in that market.
Using personas to understand the target buyer
Developing detailed buyer personas is essential when expanding into a new market. Go beyond just demographic information and include:
- Needs, challenges, goals and opportunities for that buyer
- How your product or service helps them achieve success
- Personify the persona – give them a name, include them in strategy discussions
Even if targeting the same titles/roles as your existing market, understand there will be nuances and differences in a new region to incorporate into the personas.
Map out the customer journey for the new market, including the different touchpoints, channels and messaging that will resonate. Assign customer-centric KPIs to each stage focused on their success metrics.
Technical and legal considerations
There are important technical and legal aspects to consider and invest in when expanding:
- Register your business and trademarks in the new market
- Understand taxation regulations
- Know the legal requirements around hiring, firing and employment contracts which can vary significantly by country
Optimize your website and content for the local market, including:
- Translating and localizing content, not just direct translations
- Ensuring the site is optimized for search in the new market and Google domain
- Use local imagery and understand local buying habits
Work with local legal and accounting firms who understand the regulations for international business. Don’t overlook these areas, or it could derail the expansion.
Specific go-to-market strategies
A few go-to-market approaches to consider:
Move an executive to the new market temporarily to set up the office, train a local team, and share knowledge. Have them focus on behind-the-scenes work vs client-facing. Hire locals who know the market and have existing relationships and networks to tap into. Leverage recruiters to find the right talent. Consider a hybrid approach with some oversight/training from HQ while building up the local team.
Leverage existing global customers if you have them – expand into their divisions in the new market as an entry point vs solely focusing on new logos. Use M&A of a local company for quicker expansion and access to talent, but have a plan to thoughtfully integrate the teams.
“Oftentimes, people focus too much on getting into a new market and then hiring a sales team within that market, assuming that that is going to drive the brand and demand,” Kristin said. “And that’s one of the more expensive and risky ways of going into a new market.”
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.”
So when it comes to how to expand business into new markets, these are some of the tips from the experts that work. Where are you heading next? Let us know.
On-demand training: Unlocking Global Growth: A Strategic Guide to Expanding into New Markets