A standout product isn’t always enough anymore to ensure the longevity of a business. More and more brands are beginning to diversify their product offerings to hedge their bets on where the demand of the market lies. Particularly in the face of a looming recession, it’s becoming increasingly necessary to offer a range of products for the survival of a brand, which is why you may need to be considering new sectors to expand into for the first time.
Opportunities are there to be had for those who can exploit new markets and establish themselves as a go-to new player, and there’s several ways you can go about it. Here’s some tips on how businesses can expand into new sectors with real life examples of brands who have been able to achieve this success.
Bring your existing technology to new audiences
To grow your reach you can start by looking at why your products serve your customers so well and see how this could be brought to a wider audience. Particularly if you have invested in technologies to make your product standout, think about how these could be adapted into new sectors to find these new customers. If you’ve already been fortunate enough to establish a strong customer base, customers are likely to want to spend more with you if you’re offering other products they would’ve bought anyway for the convenience and the familiarity of a business they know.
Take for example the vacuum cleaner giant Dyson. After decades of leading technology advances in home appliances, they entered the hair products space in 2016. They expanded their product range with the development of hairdryers and styling tools, with the Dyson Airwrap multitool achieving cult status and the product often being sold out for months at a time.
Dyson was able to capitalize on its reputation of innovation when they took their first steps into the beauty tools market. Applying their knowledge of airflow technology to new products coupled with their existing brand recognition meant they could assure new customers that their hair care line could be trusted.
Find your niche within new sectors
It’s great to find opportunities, but you’ll need to be wise when planning your entry into a new market. When stepping into new sectors you’ll be going up against already established businesses that often have their own brand loyalty, so it’s incredibly important to distinguish yourself from the competition and give customers a reason to consider your product.
Rather than entering a new market with a standard product, developing a particular niche or deciding to target only a small part of a sector can help to set you apart and make your expansion a success. By creating a buzz within the new market, you can capture excitement around a different approach in the sector, and encourage customers to try your product.
A great example of this is Amazon’s side step into grocery stores from e-commerce. Amazon Fresh takes the convenience shop concept and brings it into the 21st century by introducing ‘till-free technology’, where customers can walk out with their items and payment is taken from their Amazon account.
The removal of checkouts completely differentiates Amazon from a standard supermarket, and the novelty of this unique shopping experience can help entice new customers away from their usual supermarket of choice.
Offer more under the umbrella of your current sector
Expanding into new markets doesn’t mean that you have to differ hugely from your current market. In fact, a side step to offer more products with the wider industry that you operate in can be the most logical step when diversifying your product options.
Say you are already working within travel. There will be many additional areas that you could expand to within travel and complementary products that people will consider buying at the same time as purchasing your initial project. This is why you can now find options for buying not just flights, but also hotels and car hire on flight search engine Skyscanner.
Take advantage of appetites for new products
Some industries are more responsive to new players, often in markets where there is more space for innovation and an appetite for exciting new products. These goods are seen as experimental and fun and consumers are willing to take a risk on trying something new. This is more common in lower cost fast-moving consumer goods (FMCG) markets where consumers are willing to take a risk on trying something new.
It then makes sense that some of the clearest examples of successful product diversification happen within the food industry. The pandemic helped to fuel more innovation within the snack market as the option to eat out was greatly reduced. Creating snacks that cater to the growing ‘free-from’ market that gives options for different dietary requirements is a sector where there is so much space for new product innovation.
James Cadbury, the great-great-great grandson of original Cadbury founder John Cadbury, is one entrepreneur concentrating on meeting the demand for plant based chocolate. Having already diversified within the chocolate industry with the launch of Love Cocoa; luxury chocolates made in Britain; Cadbury launched H!P chocolate in 2021, filling a gap in the market for ‘good quality, creamy vegan chocolate.’
Same industry, different audience
An alternative way to look at expanding your business is to reach different types of consumers already within your sector. Even within the same sector, you can find your customer will vary widely in what they are looking for, so much so that it is worth creating separate brands with their own personalities and identities.
This is what led young adult focused clothing brand Jack Wills to create a separate brand to speak to an older customer. Having positioned themselves as ‘university outfitters’, they developed Aubin and Wills to continue to offer their preppy fashion to a 25+ market. The offshoot line rebranded in 2021 as Aubin and is sold in John Lewis stores, reflecting the kind of customer they are trying to reach.
There are so many ways you can go about taking your business into new industries, showing there is the space for innovation and bringing new products to market that will be a hit with consumers. If you’re thinking that you’ll need debt financing to help bring your next product expansion to life, check out our business loans and how we can work with you to make this happen.
