In an unpredictable economic environment, capitalising on existing success can be a wise strategy. Our latest research, which surveyed business leaders in nine different industries across the UK, shows that nearly a third of respondents are following this approach. Instead of expanding their reach to new locations, these UK businesses are focused on increasing their market share in regions where they already have a brand presence.
Most of the business leaders say their organisations are looking to achieve growth by striking an equal balance between serving their existing markets and expanding into new territories (44 per cent). The second most popular approach - and the most popular for companies in Wales and the East of England - is to solely focus their energy on regions that have generated the most revenue to date. More than a third of companies in Wales (39 per cent) are sticking to their regional strengths and nearly half in the East of England (48 per cent) are doing the same.
Primary Regions
East of England and Wales
Companies that prefer to ‘stick to their regional strengths’ achieve growth by identifying ways to improve their existing market penetration. When these companies place their bets on the right areas, they can minimise wasted resources and strengthen their competitive edge.
To further their competitive edge in their UK regions of focus, business leaders in this group are enhancing how their companies customise products and services to regional trends. Locally customised products and communications can set companies apart from their competition. Nike’s ‘Nothing beats a Londoner’ campaign, for instance, connected with younger consumers by featuring a diverse group of young Londoners comically venting about common struggles faced by sports enthusiasts in the city.
This regionalised initiative triggered a 93 per cent uplift in online searches for Nike products by people based in London. Despite the global nature of this brand, this regionally targeted strategy provided a native feel to the footwear brand’s messages allowing them to connect with customers with a level of proximity and familiarity1.
Another important way to increase market share in existing regions is by sourcing and retaining high-quality talent. Employee ideas and perspectives have been a source of inspiration for business group PTH Enterprises Ltd when searching for new growth opportunities.
As a family-owned business, the transition to the next generation gave us the chance to look at new opportunities to maximise efficiency, modernise the business and accelerate growth,” says CEO Paul Cooper. “By analysing market trends, we could better see where to invest and identified some areas that have enabled us to become a multi-channel group of businesses.
CEO, PTH Enterprises Ltd
Employees with rich local knowledge and community ties - especially in customer service - can provide valuable insight into why certain products and services are not resonating well with customers in a particular region. And being known as an employer of local people can help organisations improve their brand reputation by providing jobs for the local community.2
This approach is not risk free. Relying solely on existing regions means that companies are focused on catering for a limited market size. These companies will have to equip themselves with enough resilience to deal with disruptions from new market entrants and the determination to find incremental gains in how they can improve their products and services so they attract higher levels of repeat sales and new customers.
Barclays’ research suggests that this approach is difficult to get right. Companies that are playing to their regional strengths are 13 percentage points less confident in their performance nationally for the year ahead, in comparison to those who are focused on new and existing regions.
To avoid falling behind, companies that prefer to focus on familiar regions should not close themselves off from opportunities in other regions. They should keep on their radar the markets that have similar characteristics to their existing income-generating regions - social demographics, population density, environment or competitor landscape.
In a turbulent economic climate, maximising revenue in current regions will provide stability for many companies. However, in order to be aware of the opportunities at their disposal, those sticking to their strengths need to rigorously assess and manage where they are allocating attention and resources both inside and outside of their existing markets.
Head of Mid Corporate South, Barclays Corporate Banking
The research was carried out by FT Longitude and Barclays Corporate Banking and comprised a survey of 352 senior UK business leaders, at organisations with an annual turnover between £6mn and £250mn. The study established an equal representation from each of the following UK regions in terms of the location each respondent's business was registered in: Scotland, North of England, Midlands, East of England, Wales, London, South of England and Northern Ireland.
To discuss your business requirements and how Barclays can support you, contact us today.
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