Innovation isn’t just for startups – established companies can attack new markets too.
Incumbent firms operating in mature, saturated markets should use the power of their brands to tap the growth potential of new sectors, say Jean-Baptiste Coumau, Victor Fabius and Thomas Meyer writing for McKinsey Insights.
Customer experience increasingly defines a brand. If your firm has a solid foothold in one market, you can use consumer awareness of your brand to win customers in new markets. As you reach into new sectors, each success further strengthens your brand’s identity, creating a virtuous circle of growth.
Disney. The Chinese market for English language studies is worth $4bn. Disney timed its entry into the sector to coincide with the 2008 opening of its Shanghai Disney World theme park. The company leveraged its brand image to get access to schools, where its work spreads brand awareness.
BMW. The German automobile company adapted to changing car-ownership trends, teaming up with Sixt Car Rental to enter the car-share market. Affluent young professionals gain access to a fleet of BMWs and Minis while BMW builds brand loyalty among a new generation of customers.
Both BMW and Disney’s growth strategies combine their respected brand status with a deep understanding of new customers’ needs and a willingness to leverage data, assets and expertise in the pursuit of new business.
HOW TO ATTACK NEW MARKETS
1) Deconstruct and assess your firm’s skills, capabilities and contacts to develop a sense of the sectors to which they might adapt.
2) Look for an angle. Be creative in identifying new markets that might offer opportunities for your brand. Immerse yourself in the needs of customers. Understand what makes them tick and what guides their spending decisions. What could your brand bring to that market? What needs could it fulfil that aren’t already being met?
3) Analyse the market as closely as a startup would. “The best performers invest in detailed analysis to estimate the scale of an opportunity.”
4) Adopt a “fast fail” attitude to new ventures. 3D printing and other rapid prototyping technologies offer firms the ability to test new products quickly. If it’s clear a new product is a failure, ditch it at the earliest opportunity to avoid tainting your brand.
5) Be prepared. A clear business plan and thorough knowledge of the target market will help you launch and sustain your brand attack.