MNC vs Startup: How to Expand Your Market Through Product Extension

Are you looking at expanding your market? Market expansion doesn’t have to be a tough nut to crack; it’s about listening to customers and understanding their needs deeply. Whether you are a startup or a multinational corporation (MNC), expanding your market can significantly improve your bottom line and create new growth opportunities.

Understanding Market Expansion

Market expansion involves introducing new products to existing markets or reaching out to new customer segments. Here, we’ll focus on the first strategy: expanding your market through product extension.

Product Extension: A Key Strategy for Market Expansion

To illustrate how product extension works, let’s take a familiar brand—Colgate.

Do you use Colgate toothpaste? Yes? Will you use a Colgate toothbrush? Probably yes. But would you buy chocolate from Colgate? Probably not.

This illustrates an important concept—adjacencies. Consumers have specific expectations for each product category. You need to expand into adjacent categories, not distant ones. It’s all about staying close to your existing products while meeting customer needs.

What is the Principle of Adjacencies?

The principle of adjacencies suggests expanding your brand into areas that are closely related to your current product offerings. Let’s look at how this works:

• Start with what you know: If your core product is toothpaste, consider expanding into related products like mouthwash or chewing gum first.
• Introduce incremental innovations: Instead of jumping into an entirely new product category, introduce innovations that complement your existing products. For example, a brand that sells toothpaste might expand into oral care kits or tooth-whitening products.

By staying in the adjacent space, you build on customer trust and expectations, making it easier to achieve market expansion.

Lessons Learned from Market Expansion in My Career

I’ve had first-hand experience with market expansion. During my time at Gallup in 2007, we launched a customer engagement program to help clients retain their customers during the looming 2008-2009 recession. The initial pilots succeeded, but we struggled to scale it. Why?

The challenge was that we changed both the product and the customer. In most cases, the customer for customer engagement programs was the Chief Marketing Officer (CMO), while our main clients were CHROs. By trying to pivot too much, we failed to scale.

Strategic Market Expansion: What Went Wrong?

We learned a valuable lesson: to expand your market effectively, you need to change only one element at a time—either your product or your customer. In this case, we kept the market and customer the same but adjusted the product. This led to the successful launch of Great Manager Programs and Strength-based Leadership—adjacent to employee engagement but different enough to spark innovation.

We managed to grow our revenue during the recession because we focused on empowering our teams, listening to client needs, and keeping the product closely tied to the existing offering.

How to Expand Your Market Through Product Extension: Key Takeaways

To expand the market through new products, follow these steps:

1. Engage and Motivate Your Teams: Innovation comes from empowered teams. Make sure your teams are motivated to think creatively and work together to create new ideas.
2. Listen to Clients and Understand Their Needs: Successful market expansion is based on understanding the needs of your clients. Ask yourself: What are they willing to pay for? What gaps can your brand fill?
3. Stick to the Principle of Adjacencies: Don’t jump too far from your current product. Expand into categories that are closely related to what you already offer.

What Strategies Have You Found Most Effective for Market Expansion?

We want to hear from you! Have you successfully expanded your market through product extension or innovation? What strategies helped you succeed? Share your thoughts in the comments below or reach out to us directly for more insights.