New Markets Mean More Than Just New Area Codes
Every business aspires to move into new markets and conquer them, eventually expanding their reach to many corners of the globe. A business with a stagnant market is a business with a waning future.
But expansion isn’t simply a matter of getting shelf space in local retailers or identifying franchisees. It involves deep research into the distinctive characteristics of the new target market and understanding their implications for colonization by new brands. This research will vary from place to place but likely includes certain salient features and factors no matter where you go.
What changes from tech-crazy California to the commodities economy of Chicago? Everything. Each business climate is unique, and what works in one may not go as smoothly in the other. For that reason, managers who relocate into a very different area should look into leadership coaching to ensure that they can interact effectively with established employees. Long-standing firms with many years of trading commodity futures will likely favor a suit-and-tie attitude to match their dress code, while casual IT workers from the West Coast may show up in shorts and a hang-loose mood.
The functional skills of an effective business leader won’t vary from place to place, but corporate culture will be very different. Not better, not worse, just different. Leaders who learn to adapt to their new city will become very effective in their new roles. It is also helpful to quickly assemble a trusted group of key people as a sort of transition team. This provides an immediate endorsement of existing leaders by the new person and reassures rank-and-file personnel that the apple cart won’t be upset.
Despite the interconnected nature of our nation’s economy, there are still good places to be and bad places to be when it comes to jobs, the cost of living, and markets. The Great Plains energy boom is generating millions in income, while Detroit continues to crumble into oblivion. As a result, choosing new market destinations carefully is a critical step in making sure that business expansion will be successful. This characteristic also drives product offerings; an economy line should be available for hard-hit areas, while stronger markets will be looking for high-end goods.
Of course, not every struggling economy should be avoided. The Motor City is home to thousands of unemployed auto workers, people with strong work histories and high levels of skill. A firm in need of a place to land for manufacturing should head directly to Michigan, where lines of applicants will be long and full of qualified people.
Whatever may happen in the ongoing debate over the Mexican border, the fact remains that the Latino influence in the southwest and along the west coast is massive. Just as people of the same ethnicity have shared traditions in food, religion, and fashion, they also have similarities in their methods of commerce.
This drives not only the items they purchase–be they food, clothing, technology, vehicles, or anything else–but often the way that they shop. Consumers of certain nationalities prefer to buy directly from the grower in open-air markets. Longer-established Americans (of any derivation) usually settle on the cheapest and fastest available. Understanding the demographic profile of an area–and its implications for consumers there–is critical to succeeding in that market.
How’s the L.A. market for snow boots? Not promising? Obviously not. But not every conflict between Mother Nature and the market is so obvious. Many people picture Washington as a green, rainy state, but across the mountains on its Idaho border the state is actually quite arid. Texas, in its massive diversity, sprawls from a bayou-soaked eastern end to a temperate northern edge and truly desert western aspect. Each brings its own markets, which will have their own characteristics. Micro-markets like the pocket of ski lodges in West Virginia can be a great opportunity to move in with little competition, because other firms may assume the demand is too small.
It’s important to dig deeper than median household income and unemployment rates when relocating or expanding a business. There’s nothing to create an environment of automatic failure in a new area, but understanding the unique profile of every market will greatly enhance the likelihood of success.
Young Upstarts is a business and technology blog that champions new ideas, innovation and entrepreneurship. It focuses on highlighting young people and small businesses, celebrating their vision and role in changing the world with their ideas, products and services.