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.
Article submitted by Bank of America For mid-market companies, business success and responsible growth aren’t mutually exclusive. In fact, prioritizing responsible growth is becoming increasingly important, and successful companies are making sustainability central to their growth strategies. Beyond good corporate citizenship, they are recognizing the intrinsic link between the strength of their business and that of the communities and economies in which they operate. Leading your growth with those goals in mind builds resilience and better solutions for the future. Consider the following: Responsible growth companies perform better. Companies that consider the impact of risks and opportunities on the environment, local communities and society may produce better financial results than those that don’t. Additionally, 90% of companies believe a sustainability plan is important for remaining competitive. Responsible growth companies attract investment. A 2016 study by MIT Sloan Management Review and Boston Consulting Group surveyed 3,000 executives and managers from more than 100 countries. Findings revealed that 75% of senior executives in investment firms agree that a company’s sustainability performance is materially important to their investment decisions, and nearly half would not invest in a company with a poor sustainability record. Ninety percent of executives see sustainability as important, but only
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