Expanding into new locations
When companies are looking to expand, they often look to geography first. Makes sense on the surface – new markets bring new opportunities! If people love your product in Toronto, surely they’ll love it just as much in Montreal, right?
Reality check: Expanding geographically is tough.
It can work but success depends on how well you do your homework.
Below are 5 ways you can avoid common blindspots when looking to expand into a new market:
#1: Know the business culture
Most organizations anticipate cultural differences when looking abroad. It’s not rocket science to recognize that doing business in Jamaica will be different than doing business in Germany. Yet those same companies have a blind spot when it comes to domestic cultural differences. Contrary to popular belief, doing business in Toronto is not like doing business elsewhere in Canada. For example, Calgary is very parochial – if you’re not from the west, it’s harder to build relationships. To do business in Ottawa, having deep government connections is critical. When expanding into Quebec, a lack of French language skills will sink you.
#2: Accurately assess the competition
Seems simple enough but there’s a trick: Competition in new markets sometimes looks different than the competition in your existing market. For example, we worked with a home security company that wanted to expand to smaller municipalities because they perceived no competition. What they didn’t realize was that in smaller markets, vacuum service companies also installed security systems and had the market covered. Who knew?! It wasn’t until the company was able to identify the real competitors that they were able to make inroads into this market.
#3: Adjust your business model accordingly
Accepted business models differ from country to country. For example, in China, it’s next to impossible to do business via a direct sales offices. Companies wishing to enter the Chinese market must set up distribution via authorized reps with direct ties to government. Even companies looking to do business in the United States must consider different models. Canadians assume that things work the same in the States as they do here – not so. While business models may be similar, there are enough differences from state to state and industry to industry that doing your homework is important.
#4: Understand legislative differences
Want to market a new product in New York? Different rules apply. What you can and can’t say in your market changes when you cross the border. For example, the FTC monitors claims made in advertisements and even blog posts. They’re tough on organizations that make unproven promises or guarantees. Meanwhile, Canadians are stricter about emailing people than the Americans. Canadian anti-spam legislation is very specific about how long you can market to a person based on different levels of permission.
#5: Recognize demographic differences
Understanding what will sell in Parkville, British Columbia – one of the oldest demographics in Canada – is vastly different from understanding what will sell in Airdrie Alberta – one of the youngest demographics in Canada. And demographics isn’t just age, it’s also about males vs. female ratios, levels of education and prosperity. If you want to give your expansion effort a fighting chance, you must know your market intimately and choose your offerings accordingly.
To find out more about expanding into new markets, feel free to give us a call. We’d love to share what we’ve learnt and how we’ve helped our clients successfully make the big leap.