Once businesses reach a certain level of success, expansion becomes a possibility. This success is specific to individual business goals but could include reaching a certain turnover or profit target or having a specified number of team members.
Owning and running a successful business is no mean feat, especially in today’s market. With many still feeling the impacts of the pandemic, and the added strain of Brexit, Russia’s invasion of Ukraine, and the current cost of living crisis, it takes a lot of work to create and run a thriving business.
With that being said, there are still a variety of ways that businesses can expand. Many of these tactics have stood the test of time and are effective techniques used for achieving attainable growth within a competitive market.
Market penetration
Market penetration involves understanding the total size of a market for a specific product or service and comparing this to the number of people currently using said product or service. This allows a business to estimate its total potential market size and determine what steps to take in order to increase market share.
There are various ways that a company can approach penetrating markets, including the following:
Geography – a business that currently only sells in one region, such as the UK, may choose to expand its offering to a new region. With Brexit, this is now more challenging for some businesses, but the use of online selling also means it is far more easily accessible than before. This is a strategy that requires both thorough logistical and market research beforehand in order to succeed.
Pricing – a company may temporarily or permanently decrease its pricing as a way to attract new customers. An in-depth understanding of the target consumer base is required before this can occur.
Partnerships – as a more collaborative approach to market penetration, companies can work in partnership with other brands to gain wider access to a market. For example, a gin brand could collaborate with a gin subscription service, giving them access to its captive audience of subscribers who have a known interest in gin. While some partnerships may form naturally, businesses may also choose to seek the services of specialist consultants for advice and guidance.
Product development
While increasing sales of existing products to an existing market works for some businesses, for others product development is a better growth strategy. This entails offering new products to an existing market.
For example, a gin business may choose to start selling tonics too. The products do not necessarily have to be complementary to existing product lines, but if they are then there is a higher chance that a business’ existing customer base will be interested in them and will act on their loyalty.
There is a lengthy process involved in creating a new product and bringing it to market, but fortunately for established businesses, the tools to do so are likely already in place and lessons can be learned from the last time this process was followed. This allows for smoother, more successful product launches moving forward.
It also cannot be assumed that the existing market will be receptive to the new product and so market research still needs to be conducted.