Growth

Consumer facing product - saturate a city or expand to multiple cities?

Greg Lipinski Patent Examiner at USPTO

August 2nd, 2016

At what point does it make sense to expand into new markets? I've always been more of a fan of knocking something out of the park on a limited scale to raise money for expansion, but I see others in similar spaces who try to launch in multiple cities at once. What's the benefit of the latter if the product itself is still being refined?
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Peter Eisenman VP, Enterprise Sales and Partnerships at ZIRX

August 4th, 2016

I have intimate knowledge of this. Knock it out of the park in 1 city before moving to a second. Opening cities when you have not figured out how to make money in the first one will destroy you and drain resources.

Ema Chuku Designer. Product Developer. Founder @ NuPad

August 5th, 2016

We live in a digital era where global penetration might be easier than one can imagine and most likely a preferred method depending on your product. It really comes down to your budget. Because one market (initial market) might end up not being your ideal market for full potential growth.

We witnessed same scenario with our product.


Jennifer Fortney 20+ years’ experience in PR & marketing comms; Founder of Cascade PR, Chicago firm for small business & startups.

August 5th, 2016

I agree with everyone here. In particular, I always tell clients that they need to own their hometown market and get hometown support. It is easier, and more cost effective, to concentrate on your home market first, prove concept and engagement, build brand awareness and a marketing comms plan/template you can use to roll out in other markets. If you're bootstrapped, one market at a time is the right way to go. Small budgets won't go as far with a broad push and may fail to achieve what you desire, or hope.  Also, with today's digital world, your early adopters - hometown loyalists - will share with their friends who live elsewhere. This is how many companies create "market launch anticipation". Let me know if you have further questions. Happy to help you achieve your goals with a strategic plan.

Greg Solovyev Still learning

August 4th, 2016

This really depends on the nature of user acquisition and business model. If the business model is local by nature, meaning that you make money from local businesses or users in a specific location - definitely saturate one market first. If the product is global by nature (e.g.: flight search) - go wide. If it's a destination travel guide and you plan to make consumers pay you... your are basically screwed :) because in order to be sticky, you have to go wide, but in order to be useful you have to go deep.

Christoph Ranaweera validate early, pivot and kill fast

August 5th, 2016

I wouln't saturate one market first.
Start with one city, check that things work the way they should (technically, monetization) but you need to try then a few more cities to see whether your system works in different locations or maybe in one.
How fast you expand to cities and to how many depends as well how much effort it is (what needs to be set up locally)

Jennifer Ernst

August 4th, 2016

I agree with Peter and your own assessment. Keeping focused in one city will allow you to get your supply chain in place and good data on customer acquisition.  Note that when you move to new cities, both marketing messages and customer acquisition costs may change, but you'll have a good baseline.

Giles Crouch Digital Behavioural Economist | Speaker | Writer | Technology Strategist | on Twitter @Webconomist

August 9th, 2016

I too agree with Patrick. And many of the other comments here...my add would be which city to select. If you're talking about the U.S. market, the optimal test market cities in America are: Cincinnati, Cleveland, Austin, Portland OR, Seattle and Kansas City....that's where most brands test new products. While San Francisco or NYC may be tempting, they can be harsh on new products...better to test in easier cities, learn and reiterate for others. If it's a software product, app or cloud based, you'll pick up other markets...pirate marketing tactics. Learn. Iterate. Be agile.

Larry Zolob Marketing & Consulting, business development, careers blogger, entrepreneur, advisor, org hacker

August 9th, 2016

Greg is on the right track. There is no one right answer and it's about under what conditions you would do either one and then see what's right for you.

If your model requires being deeply embedded into one community you should focus on it. If you're marginal costs of expanding to another city are limited then do it. Another city or two could help you probe different micro demos (e.g. if you're not sure if your product is good for west coast types of fly over states you should test both)....or...you can select 2 or more cities of similar demo and compare growth rates between them when using different tactics.

Whatever you choose the reasons have to be strategic. The "why" of you what you do is more important than the "what" in many cases.


Brad Jester

August 6th, 2016

What is your product?  Software, hardware, other?  How do you distribute it?