It’s that time of year—the sun is shining, the flowers are blooming, birds are chirping and businesses are expanding into new markets.
Is your company on the path to exploring a new industry or consumer vertical, or thinking about going down this road?
If so, read on for some tips on how to navigate the waters of vertical expansion (i.e., taking an existing product/service into a new market with an untapped customer base).
The 5Ws of Expanding To New Verticals
Before making any moves, business leaders must understand the nuts and bolts of market expansion and be able to answer the 5Ws of their growth plan. These questions are only a starting point, but they’re a good way to get a feel for where you are and where you want to be. You have to start somewhere!
- What: What are you offering to a new industry or consumer with your company, product, or service? What advantages do you provide relative to similar, existing solutions? Do you offer strong points of differentiation?
- Why: Why are you expanding into this new market? What’s driving your business’s decision to enter a new territory? Why should customers choose you?
- Who: Who will you target when focusing your expansion efforts? How can you ensure that you retain the strength of your existing products, services, and core market while growing into a new one?
- When: When will you execute? More specifically, why now? Is there a better time relative to the market for launch?
- Where: Where, geographically, will you focus your expansion efforts? Why there? Have you accounted for potential impact on existing stakeholders such as advertisers and distributors?
The 5Ws are always a good gut check. In this case, they help to determine if a vertical move has been thoroughly considered. Without clear-cut answers to these questions, it’s wise to take a step back and reevaluate why you’re thinking about vertical expansion. Have all the pieces been considered? If, and only if the answer is yes, then you’re ready to dive into the “hows” of vertical expansion.
The Hows of Expanding To New Verticals
Tip #1: Be open-minded, yet realistic
Expanding into new verticals requires open-mindedness. Your business may have to shift and alter its initial vision a million times before it’s ready to launch. And that’s okay, but this should be accounted for in timing and schedules. It’s unlikely that with any new product/service expansion (vertical OR horizontal), the first concept makes it into the market as is. That’s just reality. You have to make it through a few first drafts before you can move on to the final product.
Take a few deep breaths and regroup. Being open-minded and nimble when addressing feedback will guide next steps and help accompany a successful expansion. If you aren’t willing and open to change, you might want to reconsider.
Tip #2: Identify core reasons for expansion
Being able to answer the “why” of a vertical expansion is perhaps the most important way to quantify (and justify) the time and effort it will take to get there. Run an assessment of the market you’re aiming to expand to—what is the industry’s potential, customer base, and competitor landscape?
Identify the core business motivators behind expansion into a new vertical. Are you seeking new customers to drive revenue? Are you hoping to increase market share by gaining an edge over competitors? Are you shooting for diversification? Is the move more of an internal, strategic move to keep employees happy and your brand refreshed? You need to know why and be able to convey it. If you don’t have a solid answer, you don’t have a leg to stand on.
Tip #3: Move sensibly, not quickly
Brands are elastic. Many products or services can work across various industries or markets. But that doesn’t mean your brand or service should just move for the sake of moving. Ever heard the expression that it’s better to do a few things well instead of a million things just fine? This holds true when it comes to expanding into new markets. Companies should expand sensibly (not just quickly for the sake of expanding). Remember, quality is always better than quantity.
Tip #4: Define success
While it’s nearly impossible to predict the specific outcome of a business endeavor, marketers can lay a strong foundation for measurement to help analyze—and quantify—“success.”
To do this, businesses leaders must first define what success means to them and their company. Is it defined by owning the share of voice for a new customer base? Is it a strong social media presence with a high conversion rate? Dominating the market’s revenue stream?
Tip #5: Set up for success
As a marketer or company leader, have you equipped yourself and your team with the knowledge and skills they need to successfully carry out a vertical market expansion? Consider your company’s existing expertise: Will its core strengths lead you to success as it currently stands? If not, figure out how to invest the proper time and resources into your employees and stakeholders to help you get there. You need to go all-in or not in at all.
Just remember, what your company does internally will reflect what is portrayed externally. You don’t want to leave your employees confused as to where the company is heading. They’re the backbone of your company and will determine its future success.
Go Forth and Go Expand
There’s no end-all-be-all solution to solve for a successful vertical expansion. Growth and “success” can be measured in many forms, depending on the specific vertical, new product/service, strategic partnerships (the list goes on and on). The 5Ws and how-tos highlighted are a high-level place to start if you’re considering expanding vertically. But if this is your first time executing, consider hiring a growth consultant that can help you with every step along the way, from helping plan for the daily grind to the overall big-picture solution. They can lead you through the process and keep you from blindly wandering into a new space.
Go forth and prosper.
Images: ” A confident trader is standing in the digital space over the New York city sketch. The concept of the capital market transactions and forex trading. /Shutterstock.com“
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