Most business people want to see improvements in sales and profits. But how do you get there? What choices do you have?
To build your business there are four strategic options that must be considered:
1) Sell existing products to existing customers.
2) Develop new products to sell to existing customer groups.
3) Expand existing products into new market segments.
4) Develop new products for new market segments.
Each one of these choices carries with it inherent risks and certain marketing implications. Which one is right for you? This is one of the most important decisions to be made. In fact, the best strategy may combine more than one of these options to suit different products or different areas of the business.
The least risky option is number 1. Simply find more customers for your existing products. Sometimes this is easier said than done, especially if you already have a dominant market share or you occupy a relatively small market niche. Although for most businesses there is usually scope to attract more of the same type of customers.
The option with most risk is number 4, going into new markets with a new product. This classic 'diversification' move may appear to offer great potential, but can be a recipe for disaster if you do not have an adequate understanding of market conditions or the competitive landscape.
It is difficult for a business to move into a new market at the best of times. Establishing sales channels, generating demand, managing customer expectations, and pre-empting competitors actions can be a real challenge, requiring a substantial amount of resources.
In each of the other two strategic options the business holds either an understanding of the customers (option 2) or the products (option 3), so the overall risk is somewhat lessened.
No matter which way you decide to go there are marketing decisions to be made. Sales processes, products, competitive positioning, promotional material and company image are a few of the things that will need to be reviewed.
Consideration must be given to how you will manage the marketing-related impact of these changes to produce the best result?
* Adding value for customers (i.e. providing real benefits).
* Staff issues (training needs, operational style, presentation).
* Business processes (meeting distribution demands, customer support, production).
* Measuring results and reviewing progress (sales, profits, awareness, referrals, quotes written, number of customers).
* Knowing which marketing activities to implement, and the best time to do it.
Marketing is a fundamental component of every business. In times of change and business growth it is even more important to look closely at the 'how' and 'why' aspects of your marketing activities.
© 2006Marketing Nous Pty Ltd
Stuart Ayling runs Marketing Nous, an Australasian marketing consultancy that specialises in marketing for service businesses. He helps clients to improve their marketing tactics, attract more clients, and increase revenue. Stuart also offers telephone consultations and runs regular marketing seminars. For additional marketing resources, including Stuart's popular monthly newsletter, visit his web site at http://www.marketingnous.com.au.