Market expansion is an attractive strategy if you determine that sales to current customers and markets have been maximized. One restaurant owner grew her business by adding a second market—private catering. She is also considering a third market of selling signature dessert items through local grocery stores.
Market Expansion Opportunities
Answer these questions to help you determine if you should consider growing by expanding to new markets:
- What markets am I currently reaching?
- What other markets exist for my product/services?
- Which potential markets are easiest to reach?
- Which potential markets offer the greatest sales and growth opportunities?
Consider which markets would be easiest for you to reach in light of your knowledge, experience, and contacts. A property management company that purchases run-down homes, remodels them, and either sells or rents them carefully analyzed their markets. Recognizing that their skills could be applied to commercial real estate as well, they began purchasing older office buildings, remodeling them, and renting out office space.
Cash flow and profits and/or the ability to finance growth from external sources are usually required to expand to new markets. Advertising and marketing efforts can be costly. However, with the advances in communications, technology, and transportation, many entrepreneurs have successfully broken into previously untapped markets at all levels—from local to global markets. Tere Zubizarreta and Zubi Advertising found success when she focused on a new market.
Tuning in to Demographics
Latina entrepreneur Tere Zubizarreta, founder and president of Zubi Advertising, began her career working exclusively on real estate advertising until a downturn in the market helped her realize it was time to reconsider her opportunities for growth.
Her evaluation led her to a new market. “I decided to focus exclusively on advertising to the rapidly growing Hispanic market—my market. My first client was The Miami Herald’s Hispanic paper, then called El Miami Herald. This obviously helped me gain credibility when I made pitches for new business. The rest, as they say, is historia!”
This growth strategy paid off big. What was once a one-woman show is now the largest independent Hispanic advertising firm in the United States with over 120 workers and five locations across the country. “With clients such as American Airlines®, Americatel®, Ford Motor Company®, MasterFoods®, and SC Johnson®,” says Zubizarreta, “we have a front row seat. There is no better industry in which to analyze the traits and needs of the U.S. Hispanic population than advertising.”