Perhaps the most common way to expand into new markets is geographically. Cape Cod Potato Chips is a perfect example. The company started in Massachusetts and expanded west—all the way to California. Today, this once-small business has its product in 42 states and five countries. How were its managers able to accomplish this? Simple. They had an overall understanding of what their product was and a clearly defined business strategy for geographic expansion.
While your goal may be to take your company immediately to a national level, it is important to exercise some restraint. Cape Cod Potato Chips didn't take on the world overnight. Instead, they started slowly, venturing into their immediate backyard, which happened to be New England. Once successful in New England, the next obvious move for them—or so they thought—was Manhattan. If they could make it there, they could make it anywhere, right? Perhaps, but they suffered a setback. They couldn't find a distributor in Manhattan and, for a while, they thought it was over. New England would be as far as they would go. It was then that they went back to their original marketing strategy.
Cape Cod Potato Chips had decided two important things up front. First, they weren't going to try and be a chip that was all things to all people. They were a high-end potato chip, which cost more but tasted better. Second, their goal was to build a loyal customer base; to accomplish this, they knew they had to get their product into the hands of as many potential customers as they could. But how was this little mom-and-pop company going to do this? Well, they may not have had a lot of money, but they were extremely rich in creativity, and it paid off. They began to hand out samples—not just random samples, but calculated ones. For example, they got their product on airlines so that people all over the country would have the chance to try them. Thus, these potential customers would already be aware of the great-tasting chips when the company entered their geographic region. They also partnered with other businesses, such as beer companies, as an inexpensive way to get their product out to new regions. In states with beaches, they hired interns to pound the sand and hand out their product. In short, they created a buzz, and soon, they were on the shelves in Florida. From there they took off to other geographic regions, including their dream market: Manhattan.
As you attempt to expand geographically, think of Cape Cod Potato Chips, and don't try to take on too much territory at once. It is better to expand slowly from region to region than to attempt too much at once. Also, when setbacks happen, don't automatically give up. Just because one region says "no thanks" doesn't mean other regions will do the same. If Cape Cod Potato Chips had stopped at the New York border, they would not be half the company they are today. While your goal may be to go national immediately, it is important to exercise some restraint.
When thinking in terms of geographic expansion, remember the world can be your oyster. While it is definitely easier to expand across America, don't feel compelled to stop at the U.S. border if you truly believe there is a global need for your product or service. Depending on what you are offering, you may feel there is a greater need for it in a city like London vs. a city like Lincoln, Nebraska. For obvious reasons, expanding internationally can be a lot more complicated, but if done correctly, it can also be quite lucrative. For more information, see How to Expand Your Business Globally.
The following questions are designed to help you determine if you are ready to expand geographically. Ask yourself:
- Does my business operate with strict processes, guidelines and standards that are easily reproduced in different locations?
- What changes will I have to make to my business to successfully expand into a new market?
- Marketing Program?
- Marketing Materials?
- Sales Staff?
- Sales Materials?
- Do you need to have a physical presence in the location you are considering? Or could establishing an Internet presence or mail-order process eliminate the need to physically move into a new market? If yes, what will that mean to your business?
- How is the geographic market different from the one you are in now?
- Can your operations to expand financially support additional office space, new staff, equipment, etc.?
- Is it feasible to compete with existing establishments in the geographic region you are considering?