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A market extension acquisition occurs when two companies sell the same products but in different markets. The primary goal of a market extension merger is to ensure that the merging companies have access to a larger market, resulting in a larger client base.

Market Extension Acquisitions

Because the two firms are in the same industry, this opportunity is similar to a horizontal acquisition merger. They are not competitors, however, because they operate in different markets.

This acquisition is frequently intended to absorb competition before it becomes a real threat. Rather than competing with a product that is attempting to enter your industry, an acquisition can keep them at bay.

Proactively, market extension acquisitions could assist companies explore new markets without competing with existing brands. They will also save time and money on establishing brand recognition.

The Goal Of A Market Extension Acquisition

The goal of a market extension acquisition is to expand. A market extension merger can be used to identify a similar market from the a different country, just as you can target a particular economy from the same country.

For example, suppose one company has a presence in Bangladesh and the other in India. The combination of these two could expand their global market reach, enabling them to sell to the same demographic from different geographical locations.

A market extension merger occurs when two credit unions or banks from different regions merge. At this point, the newly combined entity would have more than doubled its clients, making it a formidable competitor. Because of its expansion, it may attract new clients.

Benefits Of Market Extension Acquisition

Cost Cutting

Market extension acquisition enable both organizations to benefit from the operational excellence and resources of the other. Sharing operations and maintenance tools and man – power helps to reduce extra costs.

Increased Customer Satisfaction

A happy and satisfied client is a boon to the organization. Customers benefit from a market extension acquisition because similar products are grouped into a single bucket. Customers get a full range of products or services under one roof. As a result, customers can contact the organization for all of their needs rather than searching for multiple vendors for all of those various services and products. It will increase customer satisfaction while also increasing organizational stability.

Customer Base Expansion

Product Improvement Mergers either directly or indirectly increase the customer base. Because of the nature of the items and services offered by both organizations, the intended audience may differ at times. However, because it caters to the same specific industry, similar products can be targeted to the same client base, giving the business an expanded addressable client base with little effort.

Increased Market Share And Profit

The merger is predicated on the expectation of increased market and share, as well as reduced operating costs, which leads to increased revenues. Following the merger, both organizations serve a diverse clientele. As a result, the combined entity’s market share grows, allowing it to benefit from scale economies and generate higher profits. This type of acquisition increases not only share of the market but also profits.

Improved Use Of Common Resources

Because merged underwriting operate in the same market, they frequently intertwine their manufacturing processes, supply chains, and distribution channels. As a result, all of these factors work together to improve operational efficiency while also lowering costs.

market extension acquisition

How Market Extension Acquisition Is Unique?

The primary distinction between a Product Extension Merger and a Market Extension Acquisition is that the former concentrates on expanding the brand line, whereas the latter focuses on market expansion. The former achieves synergy through the addition of new products, whereas the latter obtains synergy through the addition of a new market base/target audience.

One of the key distinctions is that in the scenario of a Market Extension Acquisition, both organizations offer the same set of goods. In the situation of a Product Extension Merger, however, both organizations may not provide the same products and services. These products may be related or consumed together, but they are not the same.

Why Should Work With Us?

Market extension acquisition provides tailor growth services to help organizations grow quickly, efficiently and without missing strategic opportunities. Our provide services:

1. Market research and strategy development
2. Lead generation and online marketing
3. Provisional country and market management
4. Partner identification and selection
5. Roadshows are another option.
6. Staffing and other localization services

We work from Bangladesh and have performed a range of projects in the main Asian markets.

market extension acquisition

FAQs For Market Extension Acquisition

What exactly is market expansion strategy?

Market extension strategy is a strategy for keeping a product or service alive in the market. Such strategies are typically implemented during the maturity phase of a product’s life cycle to keep the product from accessing the decline stage. Marketers use a variety of extension strategies, such as repackaging, re – branding, discounting, market expansion, and so on.

Why do businesses merge and acquire?

The most common element is the potential for business growth. A business merger may allow the acquiring company to increase its market share. Furthermore, diversification in the industry gives companies an advantage when deciding to merge and acquire another business.

What are the 4 extension method?

Example of 4 brand extension strategy

  1. Extend into new categories.
  2. Encourage customers to upgrade.
  3. Remove a consumer independent.
  4. Respond to changing demands of customers.

How do you develop market extension acquisition?

  1. Determine brand equity.
  2. Assess potential risk.
  3. Leverage from industry’s core competency.
  4. Make an investment in marketing research.
  5. Ensure that the brand extension is a natural fit.
  6. Develop a brand extension strategy.
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