You can grow by leveraging your product knowledge to reach new customers. More than likely, you have spent time and money developing your product and service offering. Assuming you’re happy with your current offering, extending your strategy into new markets is a logical next step. This is aptly called a market development strategy. If you have identified potential new markets as opportunities, use these strategies to reach them.
Here are some quick considerations to make before executing a market development strategy:
- Is the market attractive? (To really answer this question, I recommend some form of market research to validate your gut feeling.)
- Are you willing to commit the required time and resources to reach this new market?
- Can your business be adapted to the new market?
- Will you maintain your current competitive advantage in this new market?
How do you grow if you’re doing what you’re already doing now? Here’s how:
- Increase present customers’ rate of use: You achieve this goal by
- Increasing the size of purchase
- Maximizing the rate of product obsolescence
- Finding new uses for your product
- Advertising other uses
- Offering incentives for increased use
- Attracting your competitors’ customers: You lure customers away from your competitors by establishing differentiation between yourself and them, increasing advertising efforts, or cutting your prices. Look at Chapter 5 to find ways to differentiate yourself from other companies.
- Attract nonusers to buy your products: This process can be done by offering trial uses of your products, adjusting the price up or down, and promoting other uses to attract these customers (check out the following Example icon for details).
- Expanding Geographically: When you’re thinking about expanding, first think about where you want to cultivate new business. You have options: other regions, nationally, or internationally. Geographical expansion works well for a company that wants to expand its service territory because it needs a physical location to serve its customers. Many of the big boys of business, including McDonalds, Wal-Mart, and Home Depot, have exported their operations to other countries. On a smaller scale, many microbreweries have opened up new locations in various metro areas and airports in the United States as a way to expand their geographical reach.
Consider the following questions if you’re thinking about expanding your product line or developing new products:
- Will your customer benefit from the added value or new feature? Are they asking for additions to the current product line?
- Do potential manufacturing, marketing, and distribution cost efficiencies exist from an expanded product line? Can you share current costs across the new products or services?
- Can your current assets, brand, marketing, and distribution be used with the new product?
- Do you have the skills and capabilities to develop and produce the products proposed?
After you’ve given product development some consideration, and you’ve decided to proceed full steam ahead, here’s how to develop new products and services to meet your market’s needs:
- Add new features or services by extending your current products. Forexample, cell phone companies add on media packages for text messaging, additional ring tones, and Internet access. Here are a few ways to extend your current offering:
- Adapt (to other ideas and developments)
- Modify (change color, motion, sound, odor, form, shape)
- Magnify (more for a higher price, stronger, longer, extra value)
- Reduce (smaller, trial version, shorter, lighter)
- Substitute (other ingredients, processes, power)
- Combine (other options, products, ideas, assortments)
- Develop additional models and sizes of your current products. For example, the iPod expanded to the iPod mini and the iPod nano.
- Develop totally new products. In this case, you usually leverage your brand recognition. Some good examples of this development are Gerber producing baby clothes and a CPA firm expanding from tax work into financial planning.