Strategies for Penetrating New Markets

Rather than incur the risk and cost of inventing or amending existing products and services, companies can expand their sales outward to penetrate new markets or new segments of current markets.

This strategy is particularly useful for small businesses that have saturated their local markets and can now grow by reaching out to new buyers they have not targeted before. The world is a big place. Reaching beyond your own backyard can be highly profitable if you successfully handle the corresponding increase in production.

Consider these ways of achieving increased market penetration:

Segmentation – Your current target market focuses on only one segment of a wider population who could be attracted to buy your product or service if you pursued them as a target as well. Some means of doing this are:

  • Extend current segments – Your market research may reveal types of customers who could be purchasing your wares but who currently are not because their needs are not being met. Instead, expand your target to deliberately include them as a focus.
  • Re-focus current segments – If you find portions of your existing target market declining or harder to reach, search for other segments which may be growing and which your product could be re-positioned to capture. For example, as sales of one baby shampoo fell along with the birth rate, the product was re-targeted at aging boomers with sensitive skin.
  • Find new segments – Your market research may reveal new applications of your current products which you had not thought of before. One skin cream was originally sold as a skin cleanser for young women but the manufacturers found older women were using it as a moisturizer and added this segment to their marketing campaign.

Geographic expansion – One of the most obvious ways to increase sales is to extend your current target market into new regions, especially ones where you expect little competition. This assumes your business is not too geographically isolated such as ones tied to tourism.

  • Media advertising – Placing ads in select newspapers and magazines with wide distributions will reach a large audience of prospective new buyers, especially if these publications target the same market as you do. Similarly, local television and radio station advertising in towns or cities containing your target market may prove cost-effective, especially in late night or other time slots.
  • Mail-order catalogue – Some small business producing a wide range of related products could publish their own product catalogue and solicit mail-order sales. Mailing lists of thousands of different market segments and profiles are available for sale to support this strategy.
  • Consider alternatives – Instead of taking on additional capital investment yourself, consider other ways of expanding through association with others such as franchising, licensing or networking.
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