Don’t let the moniker “small markets” mislead you. Expanding into these countries or regions offers tremendous business opportunities, even for large enterprises.
Part of the appeal is their tendency to get overlooked. After all, do Western business leaders dream about opening shops in locations like Oman and Malta? Probably not.
This article explores the benefits of this small market expansion and various strategies you can use to win at it. Then, we look at case studies of businesses that succeeded in small markets. By the end, you should feel more confident about selling overseas.
Benefits of small market expansion
The benefits of small market expansion are often what you might expect and include:
- Access to a new customer base not yet tapped by competitors, allowing you to corner the market and charge higher prices
- Opportunities for niche products and services that the existing players aren’t serving
- Reduced competition for your services
- Easier market saturation – you don’t need to set up as many locations to dominate the country and become the go-to brand in your industry
- Stronger relationships due to close-knit communities and word-of-mouth marketing
A final oft-overlooked benefit of small markets for business expansion is the ability to adapt to change. If new trends arrive, you can refit stores or switch to new products more quickly and without as much retooling.
Successful expansion strategies
So, how can you expand into small markets?
Again, you have plenty of options.
Most businesses invest directly, setting up subsidiaries they own in target locations. However, that approach is only desirable if you want to retain complete control. Other approaches include:
- Franchising – letting franchisees use your branding and marketing resources in exchange for royalties
- Local partnerships – leveraging third-party companies to help with specific aspects of your operation, like distributing goods
- Joint ventures – teaming up with a local firm that already has experience in the sector, perhaps rebranding them to match your style
- Leveraging local talent – using professionals to help with things like marketing and brand monitoring
- Vendor networking – sourcing materials and supplies from reliable companies operating nearby
Case studies and examples
So, with that out of the way, which businesses have achieved significant results from small market expansion?
Dangote Cement is a good example. This group now has a presence across Africa and manufactures essential building supplies.
The company’s success comes from its local distribution and production. Setting up manufacturing facilities in Africa helped it manage poor infrastructure and high transportation costs. The brand also focused on meeting local needs – funding some road projects to help bring products to market.
Denmark’s LEGO corporation has also seen massive success in small markets. The company is an expert at crossing cultural barriers and storytelling.
Its primary success comes from releasing creative new sets that entertain children. It often focuses on popular trends in target markets and builds toys that reflect these.
Conclusion
Setting up shop in small markets isn’t peripheral to your strategy – it’s central. These locations can generate massive profits for their size.
What’s more, locating them is straightforward. Franchising, direct investments and local partnerships are all viable options.
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