Don forget the Marketing, when it comes to Market Diversification
You have just identified the ideal new market for your business to penetrate.
You’ve determined the new market and the opportunity it presents are a good match for your organizational strengths and resources.
You’ve determined the barriers of entry are passable, profit expectations are acceptable and there is a sufficient need for the products and services you offer.
You know who the competitors are, what the value chain is and, most important of all, who the key customers are.
But the big question is, do those key customers know who you are?
Identifying and understanding a potential new market is a critical first step in any market diversification strategy. The ultimate goal, however, is to be successful in selling your goods and/or services into the new market. This is generally the hard part.
Remember, what may be a new market for you, is likely somebody else’s core market already. Getting a seat at the table usually means unseating someone who has been sitting there for awhile—or at the least getting them to move over a bit.
There are a number of different ways to get a seat at the table—innovation is one of them. For example, Apple’s success in penetrating the cell phone market was a result of them offering a product which would give their customers a unique experience.
Pricing is another way to break into a market. Kia got a bigger seat at the North American automotive table during the Great Recession by offering reliable small cars at low prices.
Service innovation is still another method to break in. Federal Express muscled its way in between the U.S. Postal Service and the United Parcel Service by “Absolutely, Positively,” guaranteeing shipments would be delivered overnight.
These companies definitely had a competitive advantage that allowed them to make significant in-roads into their markets. But having a competitive advantage is one thing, making sure your customer knows what your competitive advantage is, is quite another.
In order to get your potential customers to take notice of you and to embrace you, you need to effectively communicate to them the benefit in buying from you. They must believe you can deliver on your promise and understand that what are you offering is different from your established competitors.
Effective marketing messages will go a long ways in helping you penetrate your new market.
According to Doug Hall, a marketing guru who cut his teeth in marketing for Procter and Gamble, there are three laws of marketing physics:
Overt Benefit – What’s in it for your potential customer to buy your product or service?
Real Reason To Believe – Why should they believe you can deliver on what you say?
Dramatic Difference – What are you offering different from you competitors?
Studies have shown that effectively couching your marketing messages in the above terms can dramatically increase your success with your potential customers, making a message up to three times more effective.
When framing marketing messages, don’t use generic references such as: “What makes us great is our service, quality and our people.” These types of claims don’t mean anything to your potential customers because more than likely your competitors are, at the very least, saying the same things. You need to be specific in your claims, and, if appropriate, numbers always help in giving your claims credibility. Here’s an example:
Instead of “What makes us great is our service….”
Overt Benefit: “Our Same Day, Just-In-Time Service saves you inventory carrying costs.”
Real Reason To Believe: “We have facilities around the country and in Mexico just hours away from your assembly plants.”
Dramatic Difference: “We are the only supplier with facilities ‘where you are’.”
Instead of “What makes us great is our quality…”
Overt Benefit: “You can rely on our quality.”
Real Reason To Believe: “Our products meet ANSI/BIFMA Safety Standards and are GSA Approved”
Dramatic Difference: “99.9% of our shipments have zero defects.”
Instead of “What makes us great is our people…”
Overt Benefit: “Our people help you design and develop new products which will increase your sales and profitability.”
Real Reason To Believe: “Each of our award winning engineers have over 15 years of providing successful engineering solutions.”
Dramatic Difference: “We are the only engineering firm in Northern Ohio which can provide you a complete suite of engineering services, from ideation to prototypes.”
So what are your “Overt Benefit,” “Real Reason to Believe” and “Dramatic Difference” statements for the new market you’re trying to penetrate? Drop me a line and I’ll be happy to review it and give you constructive feedback.
One remarkable thing about the list is that it rarely changes. The order may change but the top cited standards typically don’t change. Top 10 Sited Safety and Health Violations: 501 - Fall Protection 1200 - Hazard Communication 451 - Scaffolding 134 - Respiratory Protection 147 - Lockout/Tagout 178 - Powered Industrial Trucks 1053 - Ladders 305 - Electrical, Wiring Methods 212 - Machine Guarding 303 - Electrical, General Requirements Three of the 10 sited standards are directed at the construction standard (1926) while other fall within the general industry (1910). It should be noted however that the general industry standard also has fall protection guidelines. Year after year, inspectors see the same on-the-job hazards, any one of which could result in a fatality or severe injury. More than 4,500 workers are killed on the job every year, and approximately 3 million are injured. By understanding these regulations you can improve your safety program and prevent injuries. Give me a call if you have any compliance doubts, or want to review OHSA regulations. Gwido Dlugopolsky at 216-391-7766 or email@example.com
Why does it take a NASCAR pit crew only 15 seconds to change four car tires when it takes people like you and me minutes? The answer is simple SMED. Single Minute Exchange of Dies, or SMED, is a process for reducing the time it takes to do equipment changeovers. Using the principles of SMED you should be able to perform any changeover in your facility in under 10 minutes! The SMED process is simple – convert as many changeover steps as possible to “external”, meaning they are done while your equipment is still RUNNING, while simplifying and streamlining the remaining steps. SMED is broken down into the following 3 Steps: Separate Convert Streamline We found this article to be very helping in explaining the SMED process in more detail: LEAN PRODUCTION - SMED A good first step to achieve this level of SMED efficiency would be to run a kaizen event at your facility to standardize (5S) your tools and supplies. Doing this alone will help you achieve 40% to 50% greater efficiency. Once the “low hanging fruit” is gone, you can still reduce setup times another 20% by practicing more advanced SMED principles.
The secret to closing any sale is to reduce uncertainty in the buyer and replace it with confidence in YOU, your PRODUCT/SERVICE, and your COMPANY. Step 1 – Confidence in YOU Someone buying from you wants to be able to fundamentally connect with you on a human level and feel confident that you’re an expert in what you’re selling If you’re selling paperclips, be an expert in paperclips If you’re selling design and engineering related services, be an expert in design and engineering related services Focus on addressing the problem, not the solution….MEANING you already know you have the solution, connect with the buyer by being an expert with the problem he/she is facing. Prove that you know the problem and all aspects of the problem like the back of your hand. Step 2- Confidence in the PRODUCT/SERVICE you are selling Someone buying from you needs to trust the product/service you are selling will solve their problem. It’s your responsibility to deliver a solution and the benefits associated with it. Basically you need to “Hit a Homerun” communicating this message. Tip – Use Success Stories: Share with the potential buyer examples of your product/service solving problems and delivering value for