There are a lot of great products out there. Sometimes it can be hard to see past success, and into other markets for winning products your company already makes.
Not many people know that TNT was originally created and used as a synthetic dye. In fact, the person who originally synthesized the highly explosive compound never made any money on one of the most useful chemicals of the last few hundred years.
So ask yourself:
“Could I be selling my product or service into an existing market?”
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Where To Start?
It all begins with analyzing what is working for your products right now. Your company has a popular product or service because it does something well. Your customers love what your company does for a reason, and your team should be able to figure out what it is.
Once your company has a good idea who is using your products or services, it is time to look for similar markets. If your company has a ripping SaaS business, then look for other markets that could benefit from a similar platform. If your regional bakery has a line out the door for hours every morning, it could be time to look for other places that your business model could thrive.
Regardless of what your company does, the search for new markets will always start with looking at who is buying your products right now, and why they are so popular.
Where Are Your New Customers?
Figuring out why your customers use your company’s products or services will help your team brainstorm potential demographics your company could expand into. Look for groups of people that have unfulfilled needs or desires that you company can resolve.
In some cases, there will be an existing market for your products, and in others, there will be a market waiting for you. What matters most is identifying who could benefit from your company’s activities, and how to best reach that potential customer base.
For example, if there is a neighborhood that has a similar demographic to the one that your super successful bakery is in, it would be a candidate for opening up another location. Your company would want to look and see if there were any competing bakeries in the area and see what kind of people they were attracting.
The Buyer Persona
Persona means mask in ancient Greek, and when your company looks into new markets, it needs to put a mask on demographics. To some degree, almost everyone can be classified along socioeconomic lines, and your company should already have a good idea of who buys your products.
If your company works in the B2B sector, your sales department will be a wealth of information. Your team should identify who your customers are, and why they use your product or service. This process should be a snap for those of you who have companies in the B2C sector because you should already have loads of market research!
The real question to answer is:
Is there another market that is actively seeking a solution to this problem?
In most cases, the answer will be yes. What will be less certain is whether or not there is another company that is already solving the problem. For most demographics, there will be a mix of people who are looking for a solution, and people who would gladly accept a solution were one to be presented to them.
For companies that work in the B2B world, consider if your product:
-Would deliver a more comprehensive solution that accomplishes more than that of the competition?
-Create a faster/easier solution?
-Would be a less expensive solution?
For those of you who work in the world of B2C, think about:
-If your product will perform better than that of the competition?
-Is your product easier to use?
-Does your company offer a product that is less expensive than other options?
-Will your product deliver a noticeably different experience or feeling?
Answering these questions will help your team to decide if there is another market that is worth going after, and how to best assess target consumers.
See Through Their Eyes
Be sure to consider this question from the context of your market, rather than from your viewpoint
If your solution isn’t an improvement to an existing solution in the marketplace, think about how your customers use your offering. Do they use your product different from the ones your competitors make?
Think about the basic features. What you’re looking for is a difference that may create new ideas about how your product would work in other markets. Now think about what your customers value most when they buy from you.
What are the factors in your potential customer’s decision to purchase?
Is there a single deciding thing that drives a purchase?
Where Are The New Markets?
The Personas your team creates will direct what is identified as the location of a new market.
After you’ve created a customer view, think about other markets you could pursue.
Consider your market profile and the personas you created. Ask your team these questions, and work out specific markets that may fit the personas you created:
Are there similar people in other industries that we haven’t considered?
What other types of companies have problems similar to those of your customers?
Focus on your potential customer’s core needs and the solution your product delivers. Brainstorm other industries, locations, departments and demographics that would benefit from the product or service that your already supplies.
Once you have a good feel for who might be interested in your product or service, consider these ideas specifically:
• Could companies whose problems are similar to those of our current customers use our product, or is our solution scalable as well?
• Are there other ways our product or service could be used?
• If your company is in the B2B sector, could a company in another growth stage beneﬁt from your product?
• For B2C, would your company be able to market to a different demographic?
• Can we create a version to meet the needs of companies/people who have a different spending profile?
• What other industries or demographics could use our product?
• Are there other geographic markets that we can market to?
• Can our product be used by a different department or decision maker within a company/family? Why would they buy from us?
• Are there any other segments/personas that could beneﬁt from our offering? If so, who would they be?
• Are there other ways our product could be used? (Like the TNT example at the beginning)
• Are there additional features or benefits that we offer already, and could a partnership help us launch our product quickly?
• Are there segments/personas similar to our company in other industries? (This may be difficult to ascertain, don’t hurry the research on this one!)
Clearly, the answers to these questions will be dependent on your current market, and the potential demographics you are considering. Your company may want to consider buying market reports to save time, or enlisting the help of an research firm that specializes in a potential market your team has identified.
Have A Look At The Marketplace
Do your best to evaluate the number of potential customers in the new market you are considering. This will help your company decide if the potential revenue will justify the risk of entering the market.
For example, if you sell an amazing line of galvanized fasteners what is the total spending on galvanized fasteners in your potential market last year? A B2B example would be that there was $800 million of sales of galvanized staples in the market you are investigating.
While you may not make galvanized staples currently, your company may be able to invest a relatively small amount of money and reach a brand new market for galvanized staples.
Ask your team:
What do your target customers in your new market have in common?
If B2B, think in terms of company size, annual revenue, and the number of employees. If B2C, list the demographics. How many companies/products are already selling into the market?
These are important considerations, as they will help determine your positioning strategy, and how you will evaluate the potential for growth in a young market.
Now It’s Time To Plan The Launch
By now, you should be pretty sure about the market you are going to pursue. Penetrating a new market is time-consuming and requires careful planning and asset allocation, so your team should start by organizing your high-level requirements for each potential market to pursue.
Begin with high-level considerations, and then evaluate any potential problematic changes.
There will also be financial considerations that go along with expansion into a new market, and these are important aspects of your growth to review:
• New capital required
• Potential ROI
• Effect on cash flow
• Effect on EBITDA
• Banking changes
• Accounting changes
The IT system you currently use will also need to be looked at. These are common areas that will need to be revamped or created when a company changes through expansion:
• Software changes
• Hardware changes
• IT management changes
• New software
• New hardware
• New users
The last major area to think about is the people who make your company hum. Your human resources department is going to go through some changes, and these are important things to consider:
• New headcount
• New training
• Use of current headcount
• Employee performance measurements
• Management requirements
• Salary requirements
There is a lot of work that goes into identifying new markets for your product or service, but the rewards can be astounding. In addition to expanding your revenue base, your company’s brand will benefit from the additional exposure it will get in its new demographic. The core idea when looking for new markets is finding people who need what your company has to offer. Once your team does that, everything else should fall into place.