By Bruce Fischer - Wednesday, July 1st, 2009

Breaking into a new market can dramatically boost your business, provided you can confidently answer three key questions: Who am I trying to reach? How can my product or service help them? Am I offering them something they cannot get elsewhere?

It takes a significant commitment of time and resources to provide adequate answers to these questions and determine if there is in fact an opportunity worthy of the pursuit. If your organization is challenged by lagging sales, consider first if you are in fact doing all you can to a maximize revenues from your existing customer base.

It is far easier to retain existing customers than to acquire new ones. I have seen examples where having the sales team devote 25 per cent of their time upselling existing customers has boosted revenues by 30 to 40 per cent. Get to know your customers, understand what they need, and how they can derive more benefit from what you have to offer. Odds are, you have a product or service that could be of interest to an existing customer and they are not even aware of it.

If you do identify a new market opportunity to pursue, don’t lose sight of how important this established client base is to your business. Avoid the pitfall of devoting so much of your time and resources to developing a new market that you neglect your existing customers. Otherwise, you may be leaving money on the table, or even worse, giving customers reason to embrace overtures from your competitors. Customers always need to feel the love.

When looking at a new market

Address it as narrowly as possible. The more you understand your market, the better you can target your marketing. How to go about this depends on the scale of your business. Are you a local retailer looking to open a new location on the other side of town? Are you a growing software company with a solution that has an established track record in the banking industry that you believe can help manufacturers improve their supply chain logistics?

Biggest is seldom best. Expanding companies often think they should go after the largest market. But it is often the smaller niche market that can provide higher margins and greater profitability. A large share of a small market is often more desirable than a small share of a large market where there may already be well-established incumbents. If you control the market, you will see a greater return on the investment. Competitors will be at a disadvantage and will find it difficult to undercut you.

Get to know your customers. It’s one thing to identify an untapped market opportunity, but quite another to understand how you should address it. Talk to prospective customers, ask them what pain points they are trying to address for which there isn’t an adequate solution, then tailor your offering to fulfill these needs. Don’t even bother proceeding with new product or service development until you have obtained this intelligence from the field. Customers should first be consulted at the earliest stages of product/service development, rather than asked to critique something that is about to roll out.

Where do I find new markets?

A new market can be one based on geography, industry or price point. The type of business you operate and the nature of the new market will dictate how you should go about defining and capturing it:

By sector/industry. This generally involves targeting an existing product or service at a new industry or sector. It may involve customization by tweaking functionality and features, simply retooling your promotional literature to highlight the product/service’s relevance to this new market (case studies with established customers in this market are great marketing tools in this regard), or some combination of both.

By geography. In this circumstance, you may be targeting the same customer profile, but in a different part of town, country or continent. Geography obviously means different things to different kinds of businesses. For a retailer, it could mean the other side of town, or a neighbouring community. For a high tech firm, it can mean another continent. Whatever the individual circumstance, the same rules apply – you must identify and qualify the market opportunity and in the case of international expansion, the culture of your target market.

If you are an export-oriented business, the further away the new market is from your home base, the greater the likelihood that you will have to establish a satellite sales office. When operating in other countries, there are obvious differences in culture, customs and language that necessitate an on-the-ground presence.

By price point. This involves tweaking your product or service to provide customers with different price options, such as the deluxe version with all the bells and whistles and the most scalability, versus the stripped down, more economical version appropriate to a smaller customer with basic needs and fewer staff. In a challenging economy, being able to provide customers with that economy version can make a significant difference to the bottom line.

Category: Expert Advice.
Industry: Retail, Technology, Services
Functional Area: Marketing
Tags: business development, customer relations, expansion, marketing, new markets