What Is Market Expansion Strategy? A Guide to Business Growth

Market expansion offers a number of benefits. It gives you a chance to grow your customer base, increase revenue, reduce production costs, and attract new talent to your business.

However, developing and implementing a successful market expansion strategy is incredibly complex.

To help you navigate the process, we look at different approaches to market expansion, provide a step-by-step guide to building an expansion strategy and show a bunch of examples of companies that have really nailed it.

What is market expansion?

Market expansion is a growth strategy where a business aims to increase its market share, customer base, operations, and presence in either existing markets or new geographic regions. This strategy often involves entering untapped markets, launching new products, or improving existing offerings to drive growth.

Why should you consider market expansion?

Market expansion isn’t just about going global or chasing higher revenue—it’s about building resilience, unlocking growth opportunities, and future-proofing your business. Depending on your company’s goals, a well-planned market expansion strategy can deliver a range of significant benefits beyond just financial growth.

1. Revenue growth: expanding into new markets creates opportunities to tap into untapped customer segments, boosting overall sales and increasing revenue streams.

2. Risk diversification: entering diverse markets helps spread business risk. If one market faces economic downturns or disruptions, others can continue generating revenue, stabilizing the business.

3. Cost efficiency: as operations scale across new markets, businesses often achieve economies of scale, reducing the cost per unit and increasing profit margins.

4. Access to talent: expansion opens doors to a broader talent pool. Businesses can hire skilled local professionals who bring unique market insights and specialized expertise.

5. Increased brand recognition: entering new markets builds global brand awareness, enhancing credibility and positioning the company as a leader in its industry.

6. Innovation and adaptation: exposure to diverse markets drives innovation, as businesses adapt products and services to meet varied customer preferences and cultural nuances.

7. Competitive edge: market expansion allows businesses to outpace competitors by establishing an early foothold in emerging markets or underserved regions.

8. Strategic partnerships: collaborating with local partners, distributors, or service providers in new markets fosters smoother entry and reduces operational friction.

9. Improved resilience: diversifying operations across regions enhances business resilience against geopolitical shifts, regulatory changes, or localized disruptions.

10. Long-term sustainability: a well-executed market expansion strategy builds a foundation for long-term growth, creating stable revenue streams and ensuring business longevity.

7 Steps to developing a bullet-proof market expansion strategy

Let's look at the different steps you need to develop a strong market expansion strategy customized to the unique needs of your product and the market you're entering.

Step 1 - Review your business KPIs to choose the right expansion strategy

Before you start expanding into new markets, make sure you fully exploit the existing market. To determine that, you need to keep track of your product performance.

What key performance indicators (KPIs) you use will depend a lot on your product, but some common examples include:

• growth rate
• sales revenue
• market share
• website traffic volume

Besides helping you choose the right time to expand, tracking your KPIs also helps you choose the direction when you start looking for new target markets. For example, interest from customers in a particular country or sector can be an indication of unmet demand.

Source: Google Analytics

Step 2 - Do market and customer research

If market research reveals no further room for growth in the existing market, you can start looking elsewhere.

Your market research will help you to choose the right market. Ideally, you want a market with great growth opportunities and low entry costs. In the real world, it rarely happens, so be ready to compromise.

Pay particular attention to the competitive landscape. Studying your competitor's behavior will also help you figure out what works and what doesn't. Why learn from your own mistakes, if you can learn from theirs?

Finally, you need market research to identify the best ways to enter the market. This includes finding the best acquisition channels and designing your marketing campaigns.

Your market research will most likely use a combination of primary and secondary sources.

Primary:

• focus groups
• customer interviews
• social media monitoring
• product usage tracking
• surveys

Secondary:

• company websites
• governments statistics
• industry associations
• published market research reports
• trade publications

Source: Market Research

Step 3 - Get a leadership buy-in

Your market research and competitor analysis are also essential to get support from senior stakeholders and leadership.

Market expansion initiatives are risky, so you need to build a robust business case to reassure them that it's worth pursuing.

Apart from product and target market knowledge, you will also need to have a good grasp of your corporate landscape and great persuasive skills to bring all key decision-makers on board.

Step 4 - Develop a budget

Apart from the potential benefits, your business case needs to include the details of the financial resources needed to enter the new market. Typical costs include:

• Salaries
• Market research
• Product development
• Marketing and advertising
• Sales
• Customer support
• Tool stack
• Contingency

Step 5 - Set clear targets

Once you get the green light from the management, you need to set clear goals for your product in the new market.

Start by choosing the high-level goals you want to achieve in the long run. Next, focus on more granular short-term objectives that will act as stepping stones toward the overall goals.

There's a very big chance that your company is already using a goal-setting framework and it may be a good idea to stick to the same one for the sake of consistency and efficiency. Some popular examples include:

• Objectives and Key Results (OKRs)
• Think big, act small, and move quickly (BSQ)
• SMART goals
• Goal Pyramid
• Backward Goals
• Big Hairy Audacious Goals (BHAG)
• One Word Goal Setting

Step 6 - Build a cross-functional team

To develop and implement your market expansion strategy, you will need support from teams across the organization. Your team should include members with expertise in:

• Analytics and data science
• Marketing
• Engineering
• Design
• Finance
• Legal

As a part of the team-building process, you need to provide its members with adequate training. Make sure that all team members are familiar with the characteristics of the new market, and the tools and processes you will use.

Step 7 - Adjust your product and offer

Having identified the characteristics of the new market and set your expansion goals, it's time to adapt your product to the requirements of the target customer.

This may require adapting the product functionality. If your competitors are offering features that you don't, you will have to add them to stand a chance of getting a foot in the door. This may be necessary when you're entering a new sector.

Designing a new pricing strategy is another step. Again, if your competitors are cheaper or the target consumers have less dosh, your pricing plans need to reflect it. Source: Comparitech

Step 8 - Localize your product and marketing strategy

If you're looking at international expansion, you will most likely need to localize your product.

This may require not only translating your website, product UI, or marketing materials into another language.

Even if your target customers speak the same language that the product was originally designed for, you will need to make adjustments to account for cultural differences. For example, the British and the American use different date formats.

To make sure your product localization is comprehensive, why not look at the customer journey map? It will help you identify all the assets that users engage with at different stages of their journey. These include:

• display adverts and search keywords
• landing and product pages
• sign-up flows and payment pages
• onboarding steps
• emails and newsletters
• in-app messages
• resources center entries and educational materials like tutorials

Translating all of these manually is extremely time-consuming. However, localization tools like Centus will allow you to automate many of the processes.