Tips to Expand into New Markets

Businesses always need to be on their toes to find new ways to grow profits and reach new customers. The “Market-Product” matrix, developed by Igor Ansoff describes four basic ways by which a business can plan its growth and expansion strategy. Taking the combination of products and markets as starting points that define a company, he enunciated the following strategies:

Strategy 1: Market penetration. This strategy places its focus on gaining a larger share of an existing market. It is about growing with current products in current markets. This is possible through price cuts, higher spend on advertising, working on the distribution channels to increase product reach and attracting non-users by way of innovative promotions.. A clothing house, for example, can sell more to its customers by offering the second garment at a 50% discount or rolling out joint promotions in order to boost sales on certain days..

Strategy 2: Market development. The focus of this strategy is to reach new segments of the market with the existing products. This strategy can be used to reach new consumers through marketing actions (for example, the case of the Fernet that was repositioned as a drink for young people in Argentina) or by geographical expansion, by way of exports or opening of new branches. Franchising also allows rapid growth in new markets.

Strategy 2: Product development. In today’s dynamic business environment, the product development strategy (focussed on developing new products or modifying existing ones to meet the market’s expectations) has gained a lot of significance. A brand needs to keep up with the trends in the market in order to prevent its products from becoming obsolete. The meteoric rise of Nokia phones followed by its downfall is remembered by most of us. They were no match for the iPhone's superiority. Assessing customer needs is of paramount importance here.

Strategy 3: Diversification. While in the previous strategies, the same product-market area is operated upon or only one of the elements is modified, this growth path implies modifying both the products and the markets. It is a high-risk strategy as it involves moving simultaneously in two new directions. Of course, there are points of contact or synergies between old and new businesses. A consolidated hotel, for example, could diversify into residential construction services.

One of the prerequisites when expanding into new markets is to have your entire documentation – technical, legal and marketing - translated in the required language for the new market. Kocarek GmbH is a translation company with over 40 years of experience in translating content into different languages. They focus on law, economics, marketing, the field of technology, communications, and others.