Whether it's a grocery store or a fast-food giant, expansion is one of the trickiest things a business can undertake; after all, there's no guarantee that even the most ravenous burger eater will appreciate a new sandwich menu, especially if the plan to market it was drafted on the back of a napkin. Understanding the capabilities of a brand is only a small part of business growth. It's the customers who will determine its viability.
Focus Groups
Central to marketing literature is the concept of a target market, the group of people most interested in a product and the one brands ought to spend their time trying to attract. Historically, businesses have broken their target audience down into demographics (age, gender, etc.) and thrown marketing materials at the most relevant ones. But now there's some evidence that personalities are a better judge of a person's interests than their physical characteristics.
But where does demographic data come from? The obvious answer is through talking to customers directly by setting up focus group interviews and distributing surveys. To use the example of a company such as Nike, questions like "why do you like this product?" or "what features would you like to see added in the future?" can illuminate customers' expectations of the brand and open new avenues for development. A focus group can also serve as a warning against expanding in unpopular directions.
A good example of a company that successfully broke into a new industry is Sun Bingo, a gaming website powered by the popular Sun newspaper which hosts games from roulette to slots, and has a new bingo room opening every minute. What makes The Sun's example so compelling is the fact that it expanded in a direction radically different from its core business. In such a scenario, it's important to gauge potential customers' appetite for the new product as the existing user base, a group with different interests, may not be the best source of information.
Branching Out
As mentioned, appeasing and appealing to the customer is just the starting point of any prospective product launch or market expansion, and things like supply lines, staffing, timing, and financial limitations can all be influential. For instance, selling in foreign markets might require staff fluent in the local language while a favorite supplier might be unable to increase production to keep up with the company's future plans.
With customers, the questions that need asking revolve around ephemeral concepts like wants and needs but, internally, there's a much greater emphasis on reorganization and simply getting the numbers right. Growth is always a challenge but maintaining a dialogue with target audiences can at least reduce some of the risks inherent in branching out to somewhere new.
So, in summary, while expansion is often regarded as a hallmark of success, it's still an undertaking that carries a great deal of risk. It's also worth noting that product launches aren't the only way to boost a company's portfolio. Think about things like franchising opportunities, licensing a product to another brand, government contracts, and even education - teaching the public how to use a brand's software is a great way to increase its uptake.
