Once a company has decided on market expansion into a new geographic area, there are lots of tasks to complete. Whether it’s a new product or service, company leadership must figure out the best way to execute the market expansion. There are benefits as well as challenges.
The benefits of market expansion into a new area
Typically, the reason why companies expand into new markets is to grow sales. It can be difficult to grow sales year over year in the same location. Perhaps the local market is completely saturated with what the company offers. Or, maybe demand in that area is slowing down. Whichever situation the company is facing, it makes sense to execute a market expansion strategy.
A company can grow sales by selling the same products or services to new customers in a new geographic area. If a company sells widgets in Ohio, it may make sense to sell those same widgets in Texas. If the company’s leadership thinks there is a demand it Texas, they should certainly focus on serving customers there.
Another way to increase sales is to sell new products to customers in a different geographic market. Let’s say that a company sells widgets in Ohio. Those widgets are perfect for customers in Ohio. However, the potential customer base in Texas needs different features. If the original widgets were built for a colder climate, a second version of the company’s widgets can appeal to customers in warmer climates. This type of line extension can be very profitable.
If the company sells the same products to similar customers, or sells a new product to different customers, the company will enjoy economies of scale. Although it may take a substantial capital investment to ramp up facilities, so the company is ready for the expansion, in the long run, the company will see the average and marginal costs decrease for every newly manufactured product.
The challenges of market expansion into a new area
As mentioned, expanding into new markets may require a large capital investment. That capital must come from somewhere. Perhaps it comes from the company’s coffers. Or, it may come from investors. Either way, it is crucial that the company treats its expansion plans as a business. This means analyzing the opportunity for profits and creating a rock-solid market expansion strategy.
As with any other substantial business initiative, the company needs market research. How can it be sure that new customers want their product? Where will the new manufacturing facility be located?
There is also the concern of transacting business in the new location while being based in the existing location. This is an enormous challenge. There are lots of things that can go wrong. For instance, the location for a new facility may not be as suitable as it was represented by the seller or the landlord. If multiple locations are being considered, the company will have to deal with the expense of sending a team of people to the new territory to conduct a review of each location.
The benefits of using contingent workers
The best way to deal with the challenges of executing business tasks during a market expansion is to engage the contingent workforce. These workers bring specific talents and resources to the table which makes them valuable assets to the team responsible for executing the expansion.
Before an expansion, a great deal of market research will need to be conducted. The company can find a contingent worker in the new location who can handle the market research better than someone at the company who is not familiar with the location.
Also, instead of sending the team of employees to scout locations for a new facility, or determine if the facility is as described, the company can connect with a contingent worker who is already in the area. This worker is available on demand and is always ready to assist. By enlisting a contingent worker, the company has feet on the ground and the contingent worker can easily handle business matters when called upon.
Because the company doesn’t have to send out a team of employees, it saves money on airfare and lodging. And, it doesn’t lose productivity when those employees are out of the office.
Whenever a company decides to expand into a new market, it makes good business sense to use contingent workers to get things completed quickly, and at a lower cost. Market expansion takes a lot of time and effort, and contingent workers are there to handle tasks in very efficient manner.