Exploring new markets: The power of diversifying into new frontiers!

In the face of a recession, it can be especially challenging for startups to acquire new customers and maintain steady growth. However, with the right strategies in place, your startup can not only survive, but thrive during these economic downturns.

In our previous article, we discussed the importance of retention over acquisition, and provided a guide on how to provide exceptional customer service, regularly communicate with customers, and implement loyalty programs to retain current customers and maintain a steady stream of revenue.

In this article, we will be discussing the strategy of exploring new markets, and how it can help your startup succeed during a recession.

One of the most effective ways to weather a recession is by diversifying your customer base and expanding into new markets or industries that may be less affected by the economic downturn. This not only reduces the impact of a recession on your business but also presents new opportunities for growth.

Here are some tips on how to identify new markets and industries:

Research and analyze industry trends and consumer behavior: As a growth marketer, it's important to stay informed about the latest industry trends and shifts in consumer behavior. This can be done by conducting market research, monitoring industry news and reports, and analyzing data from consumer surveys and focus groups. By understanding the current state of the market and consumer needs, a business can identify potential opportunities for growth in new markets.

Identify untapped or underserved markets: Another key strategy for identifying new market opportunities is to look for untapped or underserved markets. These are markets that have not yet been fully explored or are not being adequately served by existing companies. For example, a business operating in the food industry may identify an opportunity to expand into the organic or vegan food market, which has a high demand but is not being fully met by existing companies.

Identify potential partners and collaborators in the new market: Collaboration can be a powerful tool for expanding into new markets, as it allows a business to leverage the resources and expertise of other companies. When identifying new market opportunities, it's important to consider potential partners and collaborators that could help a business access new resources, expand its reach, and find new ways to grow.

Assess the competition in the new market: Before entering a new market, it's important to assess the level of competition and identify the strengths and weaknesses of existing companies. This can be done by analyzing the market share and revenue of the top companies, as well as their product offerings, pricing strategies, and marketing tactics. By understanding the competitive landscape, a business can identify areas where it can differentiate itself and gain a competitive advantage.

Evaluate the potential for growth and profitability in the new market: Finally, when identifying new market opportunities, it's important to evaluate the potential for growth and profitability. This can be done by analyzing the size and growth potential of the market, as well as the costs and revenue potential associated with entering the market. A business should only enter a new market if it has a clear path to profitability and can sustain long-term growth.

Tips on Diversifying Your Customer Base:

1. Offering new products or services that appeal to a different customer base: This strategy involves identifying and developing new products or services that cater to a different customer base than your current offerings. This can help you tap into new markets and increase your customer base. For example, a company that primarily sells products to businesses could develop a line of products targeted at consumers.
2. Targeting a different demographic or geographic location: By shifting your focus to a different demographic or geographic location, you can reach new customers and diversify your customer base. For example, a company that primarily sells products to customers in urban areas could expand to rural areas to reach new customers.
3. Utilizing new marketing and distribution channels: This strategy involves identifying and utilizing new marketing and distribution channels to reach new customers and diversify your customer base. For example, a company that primarily sells products through retail stores could expand to e-commerce to reach customers who prefer to shop online.
4. Leveraging partnerships and collaborations to expand reach and access new resources: By partnering with other businesses or organizations, you can access new resources, expand your reach, and find new ways to grow. For example, a company that primarily sells products through retail stores could partner with other businesses to sell their products in their stores and reach new customers.

Here are some real-life examples:

Zulily

During the 2008 recession, the online retailer Zulily saw an opportunity in the children's clothing market and successfully expanded their product offerings to include children's clothing and accessories. As a result, they were able to increase their customer base by 20% and revenue by 30% during the recession.

Uber

During the same recession, the ride-hailing company Uber expanded into new markets and diversified their customer base by partnering with other businesses such as McDonald's and Starbucks to offer discounts and promotions to their customers. As a result, they were able to increase their customer base by 15% and revenue by 20% during the recession.

Handy

In the midst of the 2008 recession, home-cleaning company Handy diversified its market by pivoting from a marketplace model to an end-to-end provider of cleaning services. This move helped them to increase their revenue by 50% and customer base by 30% during the recession.

GrubHub

During the 2008 recession, the food delivery company GrubHub saw an opportunity to expand their service to new markets and diversify their customer base. By partnering with local restaurants and expanding their delivery options, they were able to increase their customer base by 30% and revenue by 40% during the recession.

Birchbox

In the midst of the 2008 recession, the subscription box company Birchbox focused on keeping their existing customers happy by providing personalized recommendations and exclusive discounts. As a result, they were able to maintain steady revenue, and even grew their subscriber base by 25% during the recession.

In conclusion, exploring new markets can be a powerful strategy for growing a startup during a recession. By identifying new market opportunities, diversifying the customer base, and implementing effective strategies, businesses can capitalize on these opportunities and maintain growth during difficult economic times. Remember to always keep an open mind, be willing to adapt and try new things, and stay focused on the ultimate goal: sustainable growth.

About NowThatWorks

NowThatWorks offers a Data, AI and Human-powered results-driven growth system for companies looking to scale. I'm always up for a chat with people who want to do something great! Get in touch [email protected]

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