New markets as an extension strategy

Exploring new markets is an extension strategy where you sell an existing product to a new geographic area or to a new target demographic. The product itself can stay largely the same, so this is often a relatively cheap way to improve sales because further product development may not be needed.

Two types of new market

• New geographic area: selling in a different town, region or country from the one you already serve.
• New target demographic: selling to a different group of customers, such as a different age group, income level or type of user.

For example, a business that sells model aeroplane kits to hobby shops in one city could supply hobby shops in another region, or it could market the same kits to after-school STEM clubs rather than to individual hobbyists.

Why it can help

A new market can provide an opportunity for immediate sales growth, because you are selling a product that already exists and already works. Selling in more than one market also spreads the balance of decline and growth across markets: if sales are falling with one group or in one area, rising sales in another market can keep total sales steadier.

A business selling garden games might find UK sales drop in winter. Selling the same games to customers in Australia, where the seasons are opposite, can balance that seasonal decline.

The product must fit

Entering a new market is not automatically successful. The product must suit the new market and be accepted by customers there. A board game with English-only instructions might suit a new age group in the UK, but it may not be accepted in a country where customers need translated rules. If the product does not fit, you may have to change it, which reduces the cost saving that made this strategy attractive.