A good marketing executive should always spend a percentage of their time contemplating entry into adjacent markets. In today’s hyper-competitive technology sector, market segments mature rapidly and new products quickly become obsolete. Consequently, every company needs a well-designed strategy to expand their addressable market opportunity if they want to continue to grow. There are four dimensions by which you can expand your addressable market – new product lines, new geographic regions, new vertical industries and new customer segments:
- New product lines – Product line expansion is the path most marketing leaders follow to accelerate growth. It is easier to sell something new to a customer you already than to one you have no relationship with. Consequently, many strategists focus on answering the question – How can I sell more technology or services into the markets I focus on today?
- New geographic regions – Every technology firm should know the next geographic region that they plan to expand into. Western Europe and North America will have the largest market sizes, but also the most competition. Asia Pacific, Latin America and the Middle East have less mature markets today, but are experiencing faster growth rates and exhibit greater long term potential.
- New vertical industries – A key question most executives are challenged with is which vertical industries to focus on. The largest markets in the US are health care, financial services, government and manufacturing. However, each of these verticals has unique market dynamics that warrant consideration before attempting an organic or inorganic market entry strategy.
- New customer segments – Most companies segment their potential customers by size also. Either annual revenues or employee counts are typically the key metric used for segmentation. The largest customers, representing the Global 2000, are the best researched and understood. Each year there is more and more research devoted to the small business and mid-market segments. However, the depth and quality of analysis is still shallow compared to large enterprises.