Your business specializes in one particular type of product or service with great success – well done! Your hard work and investment have paid off! Now, though, you may be wondering how to grow your business. You know that expanding into new markets or introducing new products and services may help move your business in a new and profitable direction, but where do you begin?
Timing is everything. This is especially true in the entrepreneurial world. When it is time to transition into a more expanded brand scope? When is it a good time to broaden your market? When should you grow the spectrum of products and/or services of your business? Consider your specific business before you answer those questions, and see what’s happening in the market.
Below is a checklist of signs that indicate the time is right to make this vital marketing transition.
Four Signs That It’s Time to Expand Your Brand’s Scope
1. You Have an Established Brand and More Products to Add
Do you have a reputable brand in your market? Do others trust your products?
The first test to see if your business is ready for expansion centers on the brand itself. A brand is more than a name. Your brand represents you and your products and/or services. It speaks to the reputation of your business, the credibility of your character, and the quality of your products and/or services.
A well-developed brand can satisfy these abovementioned three qualities – and the results are brand loyalty and buyer trust. An underdeveloped brand cannot satisfy these three qualities – and requires you to spend a little more time working toward their refinement.
If your brand is well developed, do you have more products or services to add to your already thriving lineup? If you do, then consider expanding your market. If you do not have a concrete plan for your new additions, then wait until you have devised one.
2. You Are Not in the Introduction or Declining Product Life Cycle
Think about the products and/or services you are currently marketing. Could you classify each one into a stage of the product life cycle?
All products and services have a life cycle that signifies their level of maturity in the market:
- Introduction stage. You are focused on getting your product or service out there. You want to build awareness of your products and/or services, and brand. You are in the beginning stages of product trials.
- Growth stage. This is when you expand your market share.
- Maturity stage. During this stage, you are maintaining your market share and increasing your profits.
- Declining stage. Your weak product or service slowly comes off the market. You minimize expenses and retain your cash flow. At the same time, you target your customer base.
If you fall into stage one, think twice before expanding your market. An expansion during this introductory stage would result in business failure. You don’t want to prematurely expand your market if you are not established. The benefit of working in a niche market, one that has a specific and exclusive target, is the opportunity to build time gaining audience trust and perfecting your product, content, or service. Don’t be discouraged if you are in the introductory stage. Keep pushing forward but don’t expand at this point.
If you are in stages two, three, or four, then you could be in prime time for expansion. Take note that stage two, the growth stage, is only achievable after you expand your market. If you’re no longer stuck in the introduction stage, you could be in a good position to take the risk and grow.
If you are in stage three, the maturity stage, then you could be in a position to offer additional products. A product in stage four, the declining stage, could be swapped out for a better one.
3. Your Products or Services Would Work Better Together Rather Than Alone
Do you think your products or services would work better together rather than alone? Do you think your products or services would produce more income together rather than separately?
If you can answer these questions with a “yes,” then you are moving toward market expansion.
4. Your Platform Is Prepared
Do you have a well-prepared platform to handle the expansion of products? If you want to expand, ensure this step is not overlooked.
Expanding Your New Product or Service
If you pass these tests, chances are good you are ready to expand. Adding new products expands your business. Although you may be eager to expand at this very moment, follow these four steps before taking the first leap toward expansion:
- Customer needs. Find out what your customers need in each market.
- Bundling. Plan product or service bundles that would be attractive to your customers.
- Custom value proposition. Develop a custom value proposal for your product or service additions. Know how you’ll arrange the product or service in market segments you’ve previously identified.
- Sales and distribution. Know which sales and distribution channels will produce the greatest access to your target market segments.
Spend some time conducting or reviewing market research. Talk to your customers, salespeople, and distributors. Check out your competitors, their products or services, and how they’ve expanded their business. A little homework will help you access new markets and build market share to expand your own business.
Blockbuster: A Case Study of Caution
Keeping in mind everything previously discussed, there are some cautionary tales of what can happen when you don’t adapt quickly enough. Take Blockbuster, for example.
In 2000, Netflix founder Reed Hastings extended a business offer to Blockbuster CEO, John Antioco. The proposed deal: Netflix would help promote Blockbuster online in exchange for Blockbuster promoting Netflix in stores. Antioco rejected. Ten years later, Blockbuster goes bankrupt – and today Netflix is worth $26.2 billion.
So what happened?
Very simply, Blockbuster’s business model was weak and Netflix’s business model was strong. Blockbuster made a big chunk of change on their customer’s late fees, while Netflix didn’t charge late fees. Blockbuster became heavily reliant on their late fee income and didn’t realize the attraction customers found in lack-of-late-fees-Netflix.
Netflix also was fashioned with more advantages. It sold online and delivered via mail, so it didn’t have building expenses, and it could offer customers a better entertainment selection than Blockbuster. Netflix users had one subscription rather than Blockbuster’s pay-by-the-video model. Blockbuster customers were pressured to watch the video before the late fee to avoid being charged additional costs, while Netflix let its subscribers watch a video as many times as they desired.
The only setbacks for Netflix were that customers couldn’t drive by and pick a video up from a store and delays in the mail.
Blockbuster later realized its competitor’s advantage and its customers’ dissatisfaction with late fees. Antioco proposed to cancel late fees and start an online service, however, this would cost $400 million and would remove the late fee profit on which the company survived.
By 2010, Blockbuster filed for bankruptcy. Blockbuster didn’t see the potential success of its niche competitor, Netflix. It also failed to change successfully for its audience as the market changed.
A good businessperson can learn not only from good examples, but also from bad ones.