How to Pivot a Business into New Markets

At Pareto, we often see companies wanting to change their business direction.— with our research conducted with Chief Revenue Officers (CROs) finding that many report ‘transitioning into new markets’ as a primary focus in the coming months and years. 15% of respondents to our Chief Revenue Officer Challenges in 2023 survey highlighted the need to reevaluate their operations and unlock additional revenue streams through pivoting as necessary over the coming year, albeit a requirement that adds a significant amount of pressure. 

Whether it’s modifying their product and service offerings, entering a new sector, or expanding their business into new regions, leaders and CROs alike report the need to pivot into new markets as vital to remaining relevant and competitive amidst a tepid economic outlook. 

“The market is soft, in the UK at least, with the gloomy economic forecast. Budgets are being cut all over the place… That said, for folks with competitive pricing, that opens an opportunity to move into other markets.” 
Vice President of Sales, SaaS

Data collected by HubSpot has found that 55% of startups have to pivot to achieve success, whilst, during the COVID-19 pandemic, almost 70% of small businesses had to pivot to stay afloat, many of which have continued along their current path. Luckily, if you lay the right groundwork, you can ward off many of the pain points associated with pivoting into a new market. 

In this guide, we explore the different ways to pivot a business into new markets, offering you pragmatic advice, actionable tips, and strategies to support each type of pivot a business can undertake. With our support, you’ll be able to redefine your brand and positioning, leverage technology to enhance your presence and build a team that’s ready to support sustainable and profitable business growth. 

Alongside these topics, we’ll talk about navigating risks and challenges when you pivot a business, and look closely at three real-world examples of successful entry into new markets. 

Identifying Opportunities in New Markets

Once you’ve recognised the need to pivot a business, it’s important to start speaking to prospects and customers to understand their needs and why your soon-to-be competitors are not meeting them. This competitor analysis can help you understand your own product and brand positioning, driving sustainable business growth that tracks wider shifts in consumer behaviour. 

When it comes to recognising and realising opportunities in new markets, it’s crucial to approach the exercise in a systematic and strategic way. 

Several examples exist of organisations pivoting to target a new market or regional niche, including Netflix’s famous transition from a successful mail-order DVD rental service which sought to challenge Blockbuster—and do away with dreaded late fees—into a content streaming giant.

Although every transition to a new market is unlikely to be as successful as Netflix's efforts, they serve as a fantastic illustration of how businesses can adapt to technological advancement and shifting consumer preferences over time.

It isn’t easy to pivot a business, so start out by thinking about all of the ways in which your current offering could expand. For instance: 

• Pursuing new customer segments. You can often pivot a business by targeting demographics that are not being served—or being underserved—by the existing product and service offerings. Market research will give you insight into the needs of this demographic that aren’t being met, allowing you to leverage business opportunities that cater to their requirements.

• Developing existing business channels. Your organisation may already have a market presence under a specific brand, product, or service. This offers you an established and less risky means of pivoting to serve the more lucrative side of your customer base—as you’ll see in the real-world examples we explore later in this guide, several businesses have done precisely this with great success.

• Creating new products or services. When it comes time to pivot a business, following the latest market or technological trends can be a valuable and insightful aspect of your research and market entry strategies. By prototyping and producing innovative solutions to a specific and widespread pain point, you can capitalise on market opportunities and drive business growth.

• Entering new regions. Whilst trying to establish a market presence can certainly prove challenging, it is a tried and tested way to successfully pivot a business. Deciding to follow this route should always be accompanied by extensive research into the region's economic dynamics and candidate market. Consulting with an organisation with a global reach, such as Pareto, means that you’ll be provided with market and talent mapping advice alongside data on the salaries that will be required to attract and retain the top talent you need to succeed in this transition.

• Moving up or down the value chain. Whether it’s by acquiring, merging, or partnering with upstream or downstream organisations across your industry to expand your existing range of offerings, minimise costs on raw materials, or open a new eCommerce shopfront, optimising processes and capturing value across the value chain can help to pivot a business and differentiate them from the competition.

These fundamental research and market entry strategies can help you to identify opportunities for growth, but it’s vitally important that you are thorough when you’re gathering data or validating the feasibility and profitability of your identified opportunities.

Whether you’re undertaking a digital business transformation or looking to expand your product and service offering, professional support exists to assist you as you pivot to target new markets, utilise emerging technologies to enhance the customer journey and embrace data-driven decision-making.

Adapting Your Sales and Market Entry Strategies

The figures speak for themselves. For every business that successfully navigates a pivot into new markets, four fail. As McKinsey & Company notes, beating the odds necessitates ensuring that your market entry strategies are robust, sound, and backed up by research. 

From startups to large corporations, examples exist across all industries of mistimed or poorly planned transitions, including Anheuser-Busch InBev’s attempt to corner the snack market in the mid-1990s with a new crisp offering—and PepsiCo’s aggressive marketing response to this threat to its Frito-Lay sub-brand, resulting in a loss of roughly $500m for AB InBev. 

This statistic of four failures for every success as businesses pivot into new markets isn’t just restricted to a specific type of business, sector, or pivot strategy. Despite these odds, as outlined by McKinsey’s analysis of PC manufacturer Compaq, some useful information can be gleaned from historic market pivot misfires for even the smallest organisation: 

• Gradual, successful, and profitable growth is made easier when you’re closer to the minimum efficient scale for the industry you’re pivoting into. By this, we mean it’s vital to ensure that you’re reaching the lowest cost-per-unit of a product or service to positively grow your revenue, fully understand the expense of manufacturing or service delivery within that sector, and examine how many organisations that market can accommodate. Whether it’s a physical product or a SaaS service, these are vital considerations for CROs to make when considering a pivot.

• Relatedness is a good measure of how successful a pivot will be. Whilst there are examples of organisations pivoting into unfamiliar territory—with PepsiCo acting as a good example— pivoting into a product or service offering which is closer to your current portfolio can help minimise risk. Returning to the example of UberEats that we outlined in the previous section, we can see that the pivot made sense—they already had the resources they required to succeed in their transition to food delivery, with drivers in place and a tried-and-tested app that was in the pockets of consumers across the globe.

• Understanding the stage that the industry you’re pivoting into is at is vital. Like businesses, industries too have life cycles, and ensuring that you’re not transitioning into an oversaturated niche that’s preparing for a shakeout will help make your pivot less of a challenge. Choosing to enter a new sector closer to the start of its life cycle offers greater odds for success than trying to carve a space for your organisation in a market in which businesses are being acquired or eliminated by the competition or are struggling to attract customers due to a glut of similar products or services.

So, how can you adapt your approach to sales, entry, and market presence to ensure a successful business transformation? 

Redefining and Positioning Your Unique Value Proposition

Whilst it’s often the case that a product or service related to your current portfolio of offerings is likely to be the most successful, it’s important to understand the potential market and value of an innovative solution before you decide not to pursue it. 

“Most sales organisations will find the market tough with all companies starting to tighten the purse strings, so value-based selling will become very important.”

Sales Leader/Senior Vice President/Vice President of Sales, SaaS

As we’ll see in our section on real-world examples, pivoting away from your established field isn’t necessarily going to result in failure—especially if you’re diversifying into a market that your data says is crying out for an effective product or service. Redefining your business can be a powerful way to achieve success, but it’s also a gamble that relies on you understanding your positioning within the wider market and whether you’re a “greenfield” entrant to that new sector or a late-comer with a groundbreaking product or service. 

With this in mind, we can take some practical advice from Michael Skok’s timeless Forbes article, 4 Steps To Building A Compelling Value Proposition, and understand how to improve upon your existing UVP—or create a new one altogether—and make sure you’re on the right track during a market pivot. 

Following this exercise, you should be able to address several key roadblocks that will help to establish your product or service’s unique value proposition: 

• You know who the product is for
  
  

• Research has been done into who the current alternatives are and why their solution is deemed unsatisfactory
  
  

• You can say, “our product is new and addresses a real need”
  
  

• The problem-solving potential that your product or service provides has been validated
  
  

• You’re able to highlight the ways that your product is unlike the alternatives

Leveraging the 4Us model when you’re planning on a market pivot can help you to ensure that you minimise risk and that you’re entering what Skok refers to as a “white space” in the sector—that is, an area of opportunity and growth and underserved needs. 

“Any client uses a service or product for two reasons. One, it removes a pain point, and two, it adds value and brings potential revenue growth. Your challenge is making sure that your business does one or both. Whilst staying relevant within your demographic.” 
Marketing, Customer Success & Project Manager, SaaS

This enables you to ensure that the problem you’re solving is real and truly disruptive, and that you can more effectively measure the impact that you’ll have within the market you’re pivoting into. 

Building a Team for Sustainable Business Growth

When the time comes to pivot a business, a large part of ensuring sustainable growth is making certain that the team you’ve formed around you are ready to put in the necessary work to achieve success. If your talent acquisition and retention strategies are robust, you’ll find it much easier to establish your market presence and have confidence in the quality of your product or service. 

The foundations for a resilient, robust, and adaptable team that are ready to pivot with you lie in your internal culture. Fostering a culture which is inspired by a growth mindset—in which staff are encouraged to learn from their failures, celebrate their colleagues’ success, and communicate openly—can help your team to collaborate across business functions, generate innovative ideas, recognise and resolve issues, and set goals which are aligned with the overall trajectory of the company.

Even if you’re finding it to be a challenge to encourage individual employees to incorporate a growth mindset into their working practices, research has shown that leaders with such an attitude are overwhelmingly likely to get positive results out of their teams. Since change starts from the top, ensuring your leaders are ready for this transition can improve motivation, engagement, and productivity across your entire business.

Managing Risks and Challenges When You Pivot a Business

So, now that you’ve learned how to refine your market entry strategies and define your market presence through a robust positioning and research exercise, we can address how to manage the risks and challenges that arise when you decide to pivot a business. 

First and foremost is to communicate as openly as possible—not just with your internal stakeholders, executive teams, and managerial staff, but with all employees. Clear, concise messaging on such a wide-ranging business decision can significantly impact trust, morale, and enthusiasm, ensuring that all staff are aligned and pulling towards the same, shared business goal. 

As several famous examples of historical pivots have shown, keeping part of your business stable whilst another department is focused on moving swiftly into new markets can provide balance whilst you’re creating new products. 

Maintaining a reliable revenue stream can help mitigate the challenge posed by losing customers or revenue when you pivot a business, providing a financial foundation for research and innovation and allowing you to allocate resources and personnel flexibly whilst minimising resistance to change from staff. 

Pivoting into new markets can be a time of ambiguity for your staff, so make sure you’re prepared to deal with any questions or concerns that arise, whether from your internal team or your loyal customers. 

As an article published by LinkedIn illustrates, transitioning to new markets or overseas regions involves making mistakes and learning from them—creating uncertainty around your business prospects or whether you’ll be able to continue to serve the needs of your established customer base. Embracing this ambiguity and using it as a means to drive other changes that enhance efficiency and productivity within your organisation is an excellent way to take advantage of this time of experimentation and exploration. 

Real-World Examples of Successful Market Entry Strategies 

Searching for inspiration as you pivot a business? Look no further. The real-world examples we explore below highlight companies’ journeys as they transition from delivering one product or service to another, detailing their reasons for entering new markets and how they achieved sustainable business growth. 

Zipline International, Inc.

An organisation focused on innovative logistics solutions, Zipline International began life as Romotive, an affordable, iPhone-powered robotic pet. Following the hiring of two additional co-founders, Ryan Oksenhorn and William Hetzler, the organisation made clear its intention to wind down Romotive and move into new markets to deliver on a more impactful, socially-oriented mission. 

As a result, Zipline International was born, creating a unique drone-delivery service for medical and health supplies. In 2014, this led to a deal with the Rwandan government to create two distribution centres, providing vaccines, medicines, and blood products to inaccessible areas of the country. Further deals were established with Ghana, Japan, and the United States governments for these crucial supplies, as well as the announcement in 2022 of their intention to develop a platform for deliveries directly to patients’ homes. 

BioWare

For the role-playing videogame fans out there, BioWare will likely ring some bells. This legendary outfit, developer of the—at the time—groundbreaking Baldur’s Gate and Mass Effect series, was initially launched as a MedTech company, providing simulation software for professionals across the healthcare industry. 

Despite this, its three founders found that they were increasingly playing video games for rest and relaxation as they moved into the mid-1990s. Noticing that the burgeoning electronic entertainment market having recovered from the crash of 1983 and having achieved success in the MedTech field, the three pooled their financial resources, investing $100,000 into the development of their first game, the robot simulation Shattered Steel. Submitted to ten different publishers, seven returned to the company with an offer—and the rest is history. 

Shopify

From a snowboarding eCommerce shopfront to a content management system that powers roughly 11% of all global online shopping, Shopify’s pivot into new markets is perhaps our list's most significant example of success. 

Originally employed as a computer programmer, and unsatisfied with the products available as they entered the market in 2006, Shopify co-founder Tobias Lütke chose to build an alternative eCommerce shopfront. Whilst the snowboarding shop failed to generate the revenue that they’d hoped, the API and platform have gone from strength to strength, leading to $5.6bn of revenue in 2022 alone. 

Closing Remarks

Successfully pivoting a business to target new markets requires strategic planning and effective market entry strategies. Laying strong foundations is crucial for strengthening your market presence and leading to sustainable business growth.

By identifying opportunities in new markets, redefining your business’s unique value proposition, and leveraging technology to enhance your market entry strategies, you’ll be able to take the first essential steps in this transformative process. Perhaps most importantly, building a capable team that embraces a growth mindset is vital to adapting to the challenges that come with deciding to pivot a business. 

Real-world examples such as the ones explored in this guide can highlight how businesses have been able to achieve remarkable success through a patient transitional process which pays attention to technological and social trends, ensuring sustainable business growth. 

With diligent research and well-executed strategies, your business can thrive in these new markets, solidifying your presence and driving long-term success.

Supporting Sustainable Business Growth for Over 25 Years

At Pareto, our consultants have worked closely with market-leading organisations to support them as they transition into new markets. Contact us today to have a no-nonsense discussion about your urgent requirements and anticipated needs, and we’ll support you through this next exciting chapter of your professional life.