In a previous post we discussed using a simple matrix to evaluate growth strategies; you can read it here. In this post we will examine another of the four options; to do this we will use the following parameters:
· Overview discussion
· Difficulty
· Risk
· Impact to the business
To refresh, the four growth strategies to be examined are:
· Current Product, Current Market
· Current Product, New Market
· New Product, Current Market
· New Product, New Market
In this entry we will focus on the second on the list.
Current Product, New Market
Overview: Current Product, New Market is a process of studying potential markets, evaluating them and targeting the right new market. This can be a useful approach for both B2C and B2B businesses. Some ways to identify and evaluate new markets include:
· Tangential markets: look to markets that are close to your current market. If you sell industrial ball bearings to the automotive market, take a look at the farm machine or heavy machinery markets.
· Look to your suppliers: find out the other industries that your suppliers also sell into. It could be that they can provide some insight into other areas where your goods and services might also be a fit.
· Same need, different market: take a look at the value your business provides – not the products per se. Where could that value also be applied?
· Change the channel: this can be as simple as changing from selling through resellers only to adding a direct to consumer channel
· Monitor the competition: while no one wants to imitate their rivals, sometimes a competitor has found a new and profitable market that you too can enter. Or, conversely, they have entered one and done poorly – you can learn from their lessons.
Difficulty: Current Product, New Market is a marketing function: research, analysis, positioning and sales support. It may also require some operational changes. While some of these matters have some challenges, the total difficulty is medium. Outside perspective from consultants or industry professionals can be quite helpful.
Risk: As with anything in business there is risk to Current Product, New Market. Not enough time, resource and effort spent in entering a new market can lead to failure. Too much can erode the business with the core markets. But we must consider this: is the risk of trying greater than or less than the risk of not trying to expand into new markets?
Impact to the Business: Entering a new market can be jarring to a business. A start-up expects trials and tribulations as they get started but they have the advantage of not having to nurture a core, existing business while they do it. Certain personnel will be called upon to go the extra mile to prepare and then to enter a new market. Careful analysis, planning and careful execution are the keys to success – both in preserving the existing and establishing an entry into a new market.
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