Businesses should also focus on creating new markets in order to scale their business. This they can accomplish by innovating and offering unique products or services that open up new areas of demand. This often involves redefining the boundaries of existing industries or developing entirely new markets.
Key Principles to consider:
I. Value Innovation: The cornerstone of entering new markets is value innovation, which combines differentiation and low cost. Instead of choosing between the two, businesses create value for both the customer and the company. This can be achieved by offering unique products or services while simultaneously reducing costs through innovation in production or service delivery.
II. Creating Uncontested Market Space: Entering new markets emphasizes finding or creating new market spaces where demand is generated, rather than fighting for a share of the existing market. This could involve identifying underserved customer segments, innovating on existing products or addressing unmet needs in current industries.
III. Breaking the Value-Cost: Traditional strategies often require businesses to choose between providing high value at a higher cost or offering lower value at a lower cost. To enter new markets, businesses should find a trade-off by identifying a way to offer high value while maintaining low costs.
IV. Differentiation and Low Cost: By simultaneously pursuing differentiation and low cost, businesses can create a unique offering that attracts a large customer base while avoiding the pitfalls of cutthroat competition in saturated markets.
Steps to Implementing Entry into new markets
a) Analyze the Current Industry Landscape: Begin by examining the potential market space to identify opportunities for entry. Understand customer needs, existing offerings and the limitations of the market.
b) Identify new customers: Analyze potential customers who are not currently being served by existing offerings. It is important to tap into new customers—those who were previously outside the scope of the industry. This can involve exploring new geographic areas, demographic groups or business sectors.
c) Focus on Innovation: Try and find ways to innovate products, services or delivery methods. Think creatively about how your business can meet customer needs in a way that others are not addressing.
d) Reconstruct Market Boundaries: Identify and challenge the assumptions about the current industry structure. Consider how the product or service can be offered in a completely different way that sets the business apart from competitors.
e) Build a Strong Brand Identity: As you venture into a new space, build a clear, compelling value proposition. A strong brand identity will help differentiate your business from existing competitors and create customer loyalty.
f) Test and Scale: Before fully committing to a new market, first run a test with smaller section on your untapped customers. Collect feedback and refine the offering to better meet the needs of the target market.
New market entry offers a powerful decision for companies looking to tap into new markets. By focusing on innovation and creating new demand businesses can tap into new opportunities and achieve sustainable growth.
Nyangi Consultants LLP 