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

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?

9 Replies

Peter Eisenman
2
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Peter Eisenman Advisor
VP, Enterprise Sales and Partnerships at ZIRX
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.
Jennifer Ernst
0
0
Jennifer Ernst Entrepreneur • Advisor
Marketing | Business Development for early-stage, high-growth tech
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.
Greg Solovyev
0
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Greg Solovyev Advisor
Still learning
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
0
0
Christoph Ranaweera Entrepreneur • Advisor
Product Lead
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 Fortney
0
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20+ years’ experience in PR & marketing comms; Founder of Cascade PR, Chicago firm for small business & startups.
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. Smallbudgets won't go as far with a broad push and may fail to achieve what youdesire, or hope. Also, with today's digital world, yourearly 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.
Ema Chuku
0
0
Ema Chuku Entrepreneur
Designer. Product Developer. Founder @ NuPad
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.


Brad Jester
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Brad Jester Entrepreneur
Solar PV and Emerging Markets Professional
What is your product? Software, hardware, other? How do you distribute it?
Larry Patrick Zolob
0
0
Larry Patrick Zolob Entrepreneur
Marketing & Consulting, business development, careers blogger, entrepreneur, advisor, org hacker
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.


Giles Crouch
0
0
Giles Crouch Entrepreneur
Digital Behavioural Economist | Speaker | Writer | Technology Strategist | on Twitter @Webconomist
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.
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