While niching down can be a powerful strategy, many businesses fall into the trap of broadening too much—either by trying to serve too many segments or by expanding their product set in an attempt to grow their Total Addressable Market (TAM).
At first glance, an expansion strategy seems like a logical growth move, but without careful alignment with your core strengths and audience, it can lead to brand dilution, poor messaging, and ultimately, expensive failures.
Two Ways Companies Go Wrong When Expanding
- Spreading a product across too many segments – Instead of deepening their resonance with a specific audience, companies attempt to reach too many markets at once, weakening their messaging and making their product feel generic.
- Expanding into new products or categories to grow TAM – Some businesses introduce new products or services that don’t align with their core value proposition, diluting their brand and failing to gain traction.
Examples of Companies That Overextended
Quibi: Overextended Without Clear Focus
Quibi launched with an ambitious goal—short-form video content tailored for mobile users. However, they lacked a clear ICP, trying to appeal to both casual viewers and premium content subscribers. Without a strong audience fit, they burned through $1.75 billion and shut down within six months (source).
Evernote: Lost Its Core User Base
Evernote was once the go-to productivity and note-taking app, but as they tried to expand into business solutions and various side products, they diluted their core value. Users left for simpler, more focused alternatives like Notion and Microsoft OneNote, leading to financial struggles and mass layoffs (source).
Jawbone: Too Many Products, Too Little Market Fit
Jawbone started strong with Bluetooth headsets and fitness trackers but lost focus as they expanded into multiple consumer electronics markets. Unlike Fitbit, which stayed focused on fitness wearables, Jawbone spread itself too thin and eventually went out of business (source).
Red Bull Cola: A Costly Expansion Mistake
Red Bull built its brand around energy drinks and extreme sports marketing. However, in an attempt to compete with Coca-Cola, they launched Red Bull Cola, an expansion strategy into the broader soft drink market. The move diluted their brand positioning and failed to gain traction, leading to a costly retreat from the category (source).
How to Avoid These Pitfalls
1. Stay Aligned with Your Core Strengths
If an expansion move doesn’t enhance what your company is already doing well, it’s likely not the right move. Successful scale ups grow by going deeper into their strengths, not by trying to reinvent themselves or look over their shoulder to copy competitors.
2. Validate Market Demand Before Expanding
Many failed expansions were based on assumptions rather than validated demand. Before broadening your reach, conduct market research, test messaging, and ensure the expansion makes strategic sense. You don’t have to spend a lot of money, getting out there and talking to people, clients and prospects will give you a good head start with insights.
3. Keep Your Messaging Tight
When serving multiple segments, your core messaging can become watered down. Ensure that your marketing and positioning remain focused and compelling, even if you expand. Keep going to back to your value proposition and key messaging…are you still ticking all the boxes?
4. Focus on Sustainable Growth
Scaling too quickly can be as dangerous as not scaling at all. Smart companies expand strategically, ensuring that each move supports long-term, profitable growth rather than chasing short-term wins. Founders and C-Suite need to focus on future horizons (let your team focus on the short-term).
Expansion Can Be Powerful—When Done Right
Expanding your audience or product line isn’t inherently bad, but it must be done strategically. If your messaging, market, or product focus becomes too broad, you risk losing relevance and customer trust. Worse, internal teams can become distracted, unsure of priorities, or overwhelmed by rapid changes that haven’t been thought through.
Leaders may appear scattered, and employees can lose confidence in the company’s direction. Expansion without proper planning often leaves teams overworked and under-resourced, as businesses hesitate to staff for uncertain projects. This reluctance to invest in support structures can lead to burnout, inefficiency, and ultimately, unsuccessful expansion efforts.
Instead of chasing every new opportunity, double down on your strengths and ensure every growth move aligns with your core value proposition. When expansion is intentional and well-supported, it leads to sustainable success rather than costly failures.
Need Help Navigating Growth and Expansion?
At MarketCraft GTM, we help startups and scale-ups refine their expansion strategy, sharpen their messaging, and make decisions that drive sustainable success. Let’s craft a growth plan that works. Get in touch today.