Business is good. You’re generating a steady income, and the profits are rolling in. But stalled growth, lost opportunities, and untapped potential are almost certain without an effective market expansion strategy. Optimal success demands a mapped-out plan of action. There are always inherent risks, though. That’s why a multifaceted approach is vital. Avoid the plateau. Evolve. Drive market share away from competitors. And grow steadily. Develop an impactful business growth strategy with our guide below.
Success Looks Like This
Market expansion isn’t organic. There are a few prerequisites to achieving success. First of all, you need to know your business’s strengths, weaknesses, position in the market, and differentiation. Relentless focus on core competencies reinforces your brand identity, too. Secondly, you need to understand your target market. Deep insights are essential to identify customer pain points and satisfy their needs better than your competitors. Lastly, an unstoppable market expansion strategy requires flexibility. If your current marketing tactics don’t align with customer behaviors or current trends, you need to shake things up. Keep large-scale changes on the table, too. The willingness to modify your offerings or approach can be a valuable asset and the difference between failure and success.
Make Your Strategy Work With the Right Framework
Developing a business growth strategy means tailoring your approach. There’s no single method to successful market expansion. As a business grows, the target market shifts, the customer base changes, and products evolve—especially with global business expansion. The right framework guides decision-making to identify and implement optimized product marketing, selling, and development. Here are four established models you can use conjunctively to create a well-rounded and tailored market expansion strategy.
The Ansoff Matrix
Developed by applied mathematician H. Igor Ansoff in 1957, the Ansoff Matrix contains four separate strategies. It breaks down the relationship between a product and its target market and the risk associated with that combination. The four Ansoff approaches each have varying risk levels, listed below in descending order (from the riskiest to the safest option):
- Business Diversification: Bringing a new product to a new market
- Product Development: Introducing a new product to an existing market
- Market Development: Bringing an existing product to a new market
- Market Penetration: Optimizing an existing product in an existing market
Identify which of the above techniques to adopt first for optimal and impactful resource allocation.
Porter’s Five Forces
Professor Michael E. Porter’s Five Forces of Competitive Position Analysis was first published in 1979 in the Harvard Business Review. The framework was designed to assess the competitive forces influencing an entire sector instead of an individual business. Today, companies still use Porter’s Five Forces to evaluate market attractiveness and trends as part of their market expansion strategy. The five competitive forces include:
- Existing Competitors: What is the current competitive landscape? Who are the market leaders, and how do their brand, marketing, products, pricing, and target market compare to yours?
- The Threat of Substitutes (Products): Are there alternatives to your product from non-direct competitors? How does the value, quality, and cost of such alternatives compare to your offering? Will customers easily opt for substitutes, and if so, why?
- The Threat of New Entrants: How crowded is the current market? What barriers to entry exist? Can consumers switch from your product to a competitor’s easily?
- Bargaining Power of Suppliers: How many suppliers does your business rely upon for goods or services? What is the competition like among suppliers? Can you use alternative suppliers?
- Bargaining Power of Buyers: Do buyers have a wide range of supplier options? Is the product in question standard or specialized? How easily can a buyer purchase a product from multiple vendors? What is the degree of price disparity?
The weaker the above forces, the greater your chances of establishing a robust market presence. Once you understand how competitive a particular market is, you can decide whether it’s worth entering.
BCG Growth Share Matrix
Created in 1968 by Bruce Henderson, the Boston Consulting Group founder, the BCG Growth Share Matrix focuses on the relationship between relative market share and growth. It’s been used by Fortune 500 companies and other businesses to determine market attractiveness, company competitiveness, and ultimately, potential profitability. The matrix consists of four quadrants, each representing a different combination of relative market share and growth:
- Cow (Low Growth and High Share): “Bread and butter” market segments where you can generate reliable income and use the cash to reinvest.
- Star (High Growth and High Share): Significant investment opportunities. Markets with the highest future potential but also usually the smallest.
- Question Mark (High Growth and Low Share): Markets where viable growth of your product or service is still uncertain. Segments yet to be fully evaluated where investment or divestment should follow after investigation.
- Pet (Low Share and Low Growth): Markets with little long-term potential and no previous success. In terms of offerings, this quadrant represents markets to avoid and opportunities to reposition, divest, or liquidate.
The above model helps companies understand their competitive environment, identify business investment opportunities, and divest their targeting to formulate a winning market expansion strategy.
The MARACA Framework
HubSpot uses the MARACA framework to identify global market opportunities, develop a targeted approach, and enter new geographic markets successfully. It consists of three primary aspects:
- Market Availability (MA): Market size and degree of market saturation. Relevant metrics include the amount of potential revenue and the number of possible customers.
- Real-Time Analytics (RA): Current foothold, traction, and performance in a given market. Local traffic, lead generation rates, and close rates are all valuable metrics here.
- Customer Addressability (CA): Are your products or services tailored to meet market demands? Think local distribution channels, payment systems, and product localization.
Global Business Growth: 8 Practical Tactics
An international market expansion strategy is entirely different from local business growth. Essential factors include tariff rates, labor and transport costs, regulatory obstacles, marketing expenses, and product adaptation costs. Here are a few ways to implement a long-term business growth strategy abroad.
Buying an existing business may be the most profitable and appropriate approach in some cases where:
- The company is a direct competitor
- A business has a significant market share
- It’s the only way to satisfy government regulations
This business growth action plan is costly and demands in-depth due diligence to assess the true value of a firm in a foreign market. Still, benefits like an established market presence, an existing customer base, and local market knowledge are invaluable.
A mutually beneficial partnership can mean anything from a co-marketing arrangement to a tactical manufacturing agreement. Strategic partnerships are particularly useful in foreign markets with substantial differences in social and business culture. An established network of contacts and location-specific market knowledge are just two possible benefits of this corporate growth strategy.
With a greenfield investment, your market expansion strategy entails buying land, building facilities, and operating in a foreign market. It’s costly and high-risk, but it may be the most viable option in some instances. For example, a greenfield investment is suitable where it’s the only way to address government red tape, expenses, and required technical expertise.
Exporting your products directly to a foreign market is a quick way to expand your business abroad. You need clear agreement terms with trusted agents or distributors to represent your interests and brand in a new market. It’s not as “hands-on” as other market expansion strategy options, though.
Licensing is a useful strategy that entails selling the rights to the use of your product or service. It’s ideal for instances where the license buyer already has a significant market share in the particular market you wish to enter.
Companies providing specialized services like consulting, construction, architecture, etc., often opt for turnkey projects to implement a market share expansion strategy. The operation is built from scratch and handed over to the client, ready to go. It’s a brilliant way to enter new markets, as long as financing is secured from trusted sources such as government grants or corporate agencies.
A joint venture is an ideal business growth strategy for cases where you’d prefer sharing the risks and profits of entering a new market. Both partners register and work together under the name of a new company—typically for a specific product in a particular market.
You can enter the international arena by approaching a domestic firm with a global presence and significant market share to add your product/service to their inventory. It’s a cost-effective and time-efficient technique for global business expansion with one primary caveat: While your product/service enters new foreign markets, your actual brand doesn’t. Still, piggybacking can be an excellent market expansion strategy for behind-the-scenes companies and an easier way to get your foot in the door.
Explosive Growth With Effective Market Expansion
Your market entry expansion strategy must meet your specific needs while aligning with your long-term business goals. Flexibility, deep market insights, and the willingness to adapt are vital prerequisites. While many market expansion models exist, the best approach combines various frameworks to develop a well-rounded, tailored strategy. Implementation also takes many forms, from business acquisitions and direct exporting to strategic partnerships and licensing. Even one tiny misstep could entirely derail your market expansion efforts, though. Having an expert team of multinational business immigration, tax, and global marketing professionals behind you is paramount.
Book a paid consultation today and discover how Innovation Park can help bring your business to any market in the world for long-term, sustainable growth.
You May Also Like: