Market expansion strategies: Key insights and examples

Once a company has maximized its market share in a given market, expansion into new markets enables further revenue growth. This requires a comprehensive market expansion strategy to maximize success.

In this guide, we’ll define market expansion, lay out a step-by-step guide to expand into new markets, and provide examples of businesses with proven expansion strategies.

What is a market expansion strategy?

Market expansion is the process of growing a business by reaching new customer groups and introducing products and services to untapped markets. Expansion can be geographic (e.g., a North American smartphone company expands to Asia) or demographic (e.g., a clothing company for young adults creates a new line to attract older customers). When a successful business sees a slowdown in growth, expansion allows it to continue increasing revenue.

Although market expansion can pose challenges, a careful strategy provides enormous opportunities, such as:

• Economies of scale: New markets offer the opportunity to produce goods for cheaper and at a higher volume. Producing and selling in larger volumes can lower the cost per unit, increasing profit margins.
• Diversified customer base: Serving multiple markets mitigates the risk of relying on one group of customers.
• Access to new talent and resources: Expanding into new markets can connect businesses with skilled workers and business partnerships that aren’t accessible in their original markets.
• Improved brand awareness: Expanding to new markets introduces a brand to more people, making it better known and trusted.

How to expand into new markets in 8 steps 

Businesses entering a new target market must understand the cultural expectations of their target audience while accounting for potential changes. They need a strategy that’s flexible and targeted. Here is how your business can achieve both:

1. Define your goals

Every global market expansion strategy should set clear and measurable goals. Will your business broaden its customer base by introducing existing products to a new market? Or will it increase its market share with new products?

Once you’ve decided on your market strategy, outline the metrics you’ll use to analyze your progress. These are called key performance indicators (KPIs), and they might include sales, customer acquisition cost (CAC), market share, or brand awareness.

2. Assemble an experienced team

If this is your first expansion effort, consider building an experienced team that includes individuals with the appropriate expertise. This likely includes someone who has worked in a cross-functional role and understands the nuances of a market expansion strategy. Experienced individuals will help you navigate challenges, adapt to market demands, and deliver high-quality results. 

3. Perform market research

Once you’ve defined your intentions, you can research your new target market. Market research reveals what people want and how your product or service fits their needs. Study the local culture, customer needs, buying habits, and competition to create an effective growth strategy.

Tools like surveys, online research, and market reports provide valuable data. You can also use competitors as a resource, studying the strategies they use to target their customer base. The more data you gather, the easier it will be to adapt your business’s marketing to reach your target audience.

4. Create a pricing strategy

Your prices should balance competitiveness with profitability, taking into account the local cost of living, customer expectations, and what competitors are charging. Affordable pricing can attract more buyers and help you gain market share quickly, whereas premium pricing can position your product as high-quality or exclusive.

5. Develop a marketing strategy

The next step is to use the information you gathered from your market research to develop a marketing strategy. Your approach should help your target audience understand who you are, what you offer, and why your product fits their needs. This may include promoting new products to increase market penetration or investing in social media advertising to reach a younger audience. A good first step is localizing your website to optimize it for international search engines.

6. Localize your product or service

Your target market research can inform your localization process, helping you adjust your product and messaging to fit the preferences of the new audience. This might include tweaking product features or packaging, translating content to feel natural in the local language, and following local rules or regulations.

Successful localization requires accurate translations that consider the nuances of the local language. Smartling’s professional translation services pair you with a network of 100% native-language translators dedicated to your account for top-quality results. You can connect directly with your translators as they translate and edit your content, ensuring your brand voice remains intact. Brands that localize with Smartling get to market faster and form more genuine connections with consumers.

7. Test your strategy

Testing your strategy with a pilot campaign reduces risk before you fully commit to a new market. Start by launching your product or service in a small, focused area within the market, such as a specific region or customer segment. During this trial period, gather as much feedback as possible from customers, sales data, and team observations. Then, use this data to refine your product and marketing strategy.

A pilot campaign lets you identify and fix potential problems early on, better preparing you for a successful full-scale launch.

8. Track your progress

The KPIs you chose at the outset will indicate whether your market expansion strategy is working. KPIs can include the growth in sales within the new market, the percentage of the market your product or service now occupies compared to competitors, or how many new customers you’re gaining and keeping over time. Regularly reviewing these indicators shows you what’s effective and where improvements are needed.  

IKEA: An example of market growth and expansion

IKEA’s entry into the Indian market showcases a well-planned expansion strategy that combines global branding with local adaptations. After extensive research, IKEA opened its first Indian store in Hyderabad in August 2018. Their team identified a segment of the Indian population that could afford their products: young, high-earning, urban populations.

IKEA made several changes in its stores and offerings to cater to the local culture. They offered products that fit Indian homes, like smaller furniture for compact spaces and cookware suitable for local cooking styles. This matched the local expectations and purchasing habits, helping IKEA quickly gain popularity.

IKEA also noticed rapid growth in internet usage in India. The country is predicted to surpass 900 million internet users in 2025. To increase its market penetration, IKEA started selling its products online before opening physical stores in cities like Mumbai.

By adapting their global brand with these local changes, IKEA successfully entered the Indian market, showing how a company can center the needs of new customers and drive business growth.

Reach new markets with Smartling’s expertise

Expanding into new markets provides opportunities to scale your revenue, diversify your income streams, and reach various countries. Your business needs an experienced partner to seize these opportunities and maximize success. 

Smartling offers a range of business translation solutions to help you localize your content and marketing campaigns for international growth. For high-volume, low-visibility content, Smartling’s AI Translation solution delivers cost-effective translations instantly to maximize budgets and save time. For high-visibility content, the AI-powered Human Translation solution combines AI efficiency with professional translator review, yielding polished translations at scale.

Want to learn more about how you can reach a global audience? In our short ebook, A Translation Solution that Grows With Your Content, we cover five ways many companies are scaling—in many cases, to support market expansion. It’s free to download so we recommend giving it a read!