Strategizing for Growth – Identifying New Target Markets

February 7, 2011

In this series of blogs about Strategizing for Growth, we have covered the SWOT analysis (Strengths, Weaknesses, Opportunities and Strengths) and developing quantitative and qualitative objectives. Our next step is to identify new target markets. This doesn’t necessarily mean industries or areas we haven’t sold before, but perhaps a segment of customers where the competition seems to have a stronghold … and perhaps for good reasons — until now!

You may have developed some new features or overcome some major deficiencies that allowed the competition to dominate that customer segment. So now is the time to take your ammunition, load it and shoot it at the prospects so that you can gain that market share. It will require an understanding of the primary and secondary markets of that segment (so you don’t waste bullets on less-valuable targets. You also need to look at demographics (the characteristics of the customers – e.g. employee and/or sales size, SIC code, own/lease) and psychographics (the psychology of that market; e.g. why they prefer what they buy or from whom they buy it).

This is not an easy process and a common pitfall is failing to be thorough and not using critical analysis to define these characteristics. Don’t rely on off-the-cuff guesses. Do some homework on this and it will pay dividends. With information in hand, you want to develop what marketing professionals call Positioning Statements. Simply compare your product or service to the competition, listing the attributes of importance and which ones build an emotional relationship with the customer. Yes, the fact that your sweaters are the only ones available in ‘Army green’ may excite some buyers (perhaps Army vets)!

More on this next week and we have plenty more in store. I’ll be interested to hear how some of you are applying these simple marketing plan principles.

HOMEWORK:  Take your sales team and identify the markets you now serve, assess them and see if you can identify new target markets – even if you don’t think you have the resources to go after them!

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Strategizing for Growth – Part 1 – Conducting A SWOT Analysis (conclusion)

February 2, 2011

As we wrap of Section 1 (Conducting A SWOT Analysis), I can’t help but say that it’s the most neglected area I find in looking a business owners and how they get into trouble. Failing to determine the threats to your company (i.e. what factors (internal or external) could significantly impact your success) is like driving on the Audubon at 95 mph with a blindfold on. Something as simple as staying abreast of government regulations or industry trends can identify threats years in advance that could have changed the marketing or product development strategy of a company.

For a small retailer hardware store, knowing the growth pattern of certain ‘box’ stores could significantly impact their own expansion plans. For example, a local retail hardware chain might concentrate their entire marketing strategy around their knowledge of the ‘geographic route of expansion’ of certain ‘box’ store (i.e. large national chains) so they are sure to focus on areas that aren’t adequately served by the box stores. While this information isn’t published years in advance, some intelligent analysis and research can help identify such potential trends.

Threats can be even more significant in their impact than weaknesses because they are often elements over which we have no direct control but which, if identified early enough, can be things we can adapt to or take defensive measures. Threats are generally external, but sometimes they can be internal; e.g. significant unresolved conflict among key members in the business (sometimes family members).

For first timers at the SWOT analysis, I want you to know that I realize this all may sound like something out of a textbook (which is somewhat true!), but I promise that if you conscientiously do the exercise described then you will be pleasantly surprised by the insights you will gain. These insights will help you to be a better planner…and therefore a more likely better implementer of your ideas.

QUESTION:  Now that you have a snapshot of your company, are you prepared to look into the crystal ball and determine what your future holds? That’s next week!


Strategizing for Growth – Part 3 – Identify New Target Markets (conclusion)

January 26, 2011

If you’ve followed this series of blogs and been faithful to the homework, then you have developed your SWOT analysis, set quantitative and qualitative objectives (e.g. number of units to be sold; improvements to product safety), and are thinking about new target markets. The whole point of this process is to determine scenarios and how we might achieve them and deal with them, operationally as well as in terms of marketing and sales, despite the obstacles we may believe are in our way.

One easy way to identify new target markets is to simply examine the competition’s target market and determine if it is something you could service or sell to. Oftentimes the markets we serve evolved without a plan (i.e. opportunity knocked on our door or we relied on an existing customer base); so we fail to look outside our current marketplace. Our competitors can sometimes be divining rods to new market opportunities… or which markets are a death trap! There is sometimes a benefit to not being the first to enter a new market. I remember an expression I learned in a college class, “Never be the first to lay the old aside nor the last to try.” Then again, sometimes being first can provide the advantage of building brand that has lasting power to create a barrier to entry.

Another way to identify new target markets is to look outside of your current geographic market for territories that have similar characteristics as your own or who have an unmet level of supply or service that you excel at. Also, you may consider an entirely new type of client (e.g. residential customers where you were only serving commercial companies).  Of course, cost, staffing, and time considerations have to be weighed, but that comes after we first identify the new target markets. This process is one that is more like brainstorming and we don’t want to edit out any of these at this point. That will come with further analysis of cost, time, staffing, and profit potential.

We could devote many more pages on this topic but I’m confident you get the point and can use your own imagination, experience and creativity to fill the blanks.

Tune in next week and you’ll hear one more piece to this process – after which we will discuss the dreaded topic of developing a sales Forecast!

HOMEWORK:  If you haven’t finished all the pieces of the plan so far, take the time to do so. You will have a wonderful tool with which to grow your business. If you are just joining us, go back to the previous blogs and begin the process. You have time to catch up.


Strategizing for Growth – Part 3 – Identifying New Target Markets

January 19, 2011

In this series of blogs about Strategizing for Growth, we have covered the SWOT analysis (Strengths, Weaknesses, Opportunities and Strengths) and developing quantitative and qualitative objectives. Our next step is to identify new target markets. This doesn’t necessarily mean industries or areas we haven’t sold before, but perhaps a segment of customers where the competition seems to have a stronghold … and perhaps for good reasons — until now!

You may have developed some new features or overcome some major deficiencies that allowed the competition to dominate that customer segment. So now is the time to take your ammunition, load it and shoot it at the prospects so that you can gain that market share. It will require an understanding of the primary and secondary markets of that segment (so you don’t waste bullets on less-valuable targets. You also need to look at demographics (the characteristics of the customers – e.g. employee and/or sales size, SIC code, own/lease) and psychographics (the psychology of that market; e.g. why they prefer what they buy or from whom they buy it).

This is not an easy process and a common pitfall is failing to be thorough and not using critical analysis to define these characteristics. Don’t rely on off-the-cuff guesses. Do some homework on this and it will pay dividends. With information in hand, you want to develop what marketing professionals call Positioning Statements. Simply compare your product or service to the competition, listing the attributes of importance and which ones build an emotional relationship with the customer. Yes, the fact that your sweaters are the only ones available in ‘Army green’ may excite some buyers (perhaps Army vets)!

More on this next week and we have plenty more in store. I’ll be interested to hear how some of you are applying these simple marketing plan principles.

HOMEWORK:  Take your sales team and identify the markets you now serve, assess them and see if you can identify new target markets – even if you don’t think you have the resources to go after them!


Strategizing for Growth – Part 2 – Quantitative and Qualitative Objectives (conclusion)

January 17, 2011

I mentioned in an earlier blog that if you don’t know where you want to go then ‘anywhere will do’. Stephen Covey espouses that one of the ‘7 Habits of Highly Effective People’ is to ‘start with the end in mind’. Simple as it sounds, I can’t begin to count the number of business owners who are working diligently to ‘make a buck’ but can’t really show you anything in writing that reflects their SPECIFIC intentions or expectations.

This is where that leap of faith to suspend your disbelief is needed. So many business owners won’t allow themselves to articulate the answer to ‘what would I want if I knew I could not fail?’ So, let’s start out with just a ‘wish’ and then let’s believe in its possibility enough to be willing to take the time to carefully analyze what is achievable in terms of sales growth, margin improvements, staff acquisition, productivity gains, equipment resources process improvements, and the like. But for the purposes of this section (the marketing plan), simply visualize what you might see in terms of improvements that will have a positive impact on sales… and the marketing that ties into achieving it.

Take time to identify areas where you might want to direct your attention to gain more sales opportunities. For example, could your sales team make a better effort to get referrals from current customers or perhaps do a better job up-selling them? The point of this exercise is to have you identify all the potential areas that could be pursued and them speculate what might be the possible consequences (realistically speaking) of those efforts… and then analyze that ‘output’ to make an educated forecast.

Note that the difference between a forecast and a projection (at least to me) is that a forecast is a projection based upon some past evidence where a projection is without the benefit of such information.

So, give it your best shot but don’t be shy about using some ‘gut instinct’ in the process.

QUESTION:  Do you feel like you’re making progress? If not, drop me a line (stan@fambizdoc.com) because I am happy to help you tap into your full potential and this process can do that! The purpose of this blog is to help you build your business…not just espouse theory.


Strategizing for Growth – Part 2 – Quantitative and Qualitative Objectives

January 12, 2011

If you have conscientiously completed the SWOT analysis that means you really know what you have to work with and what you have to work on to achieve your objectives. Now the question is: what are your objectives? That’s where the rubber meets the road because that involves more than picking a sales target for the next twelve months.

This step is a stumbling block for many owners. Their first response is “I don’t have a crystal ball and I’m not an economist!” Who could argue with them…but I don’t let them opt out on those excuses. Of course, nobody can predict the future (though many make a living convincing others they can!). However, one can examine the past and look at current conditions to establish a ‘feasible range of occurrence’. After all, one has to start somewhere in the planning process. As we gather more information, we can adjust those ranges and the ‘confidence %’.

The whole point of this process isn’t to suggest that we are prophets but to determine scenarios and how we might achieve them and deal with them – operationally as well as in terms of marketing and sales. If there is anything I want to get across in all the blogs I will write, it is that owners and managers must be ‘open to discovery’ and the way to that discovery is to identify realistic potential scenarios, think about them, strategize about them (i.e. develop alternative paths and actions) and then MAKE A CHOICE and run with it until you determine it needs some adjusting. Staying ‘status quo’ should be a CHOICE…not a default for inaction, indecision or sheer terror!

I hope you’ll visit me next week to pick up on this. I think these ‘doses of insight’ are best absorbed in small quantities and I hope you will read them more than once so they sink in and so you can identify how you will use them…and then start to use them. I welcome your feedback…good, bad or ugly! Thanks for taking the time.

QUESTION:  Do you have a mental picture in your mind of what ‘success’ will look like…

                             financially, operationally and structurally?

P.S. If you’d like to move more quickly to develop your company’s marketing and sales plan, just pop me a note and I’ll give you some advanced tips… but also feel free to check out our business website: www.management-advisory-group.com


Strategizing for Growth – Part 1 – (continued)

January 5, 2011

Conducting A SWOT Analysis (continued)

In our last blog, we left off with a brief discussion of the SWOT analysis (Strengths, Weaknesses, Opportunities and Threats).  We spoke about defining your company’s strengths, so let’s move on to an equally important area:  describing its weaknesses.

While owners and managers have no problem discussing their strengths, one common weakness I find in many plans is the failure to adequately identify and deal with the weaknesses in the company. It is tantamount to a confession that they don’t know what might hold them back from achieving success or don’t feel the weaknesses matter very much. It is essential to face these issues head on so the reader (e.g. a banker, a key manager) knows you are prepared for all events.

Weaknesses can be segmented into categories: workforce, equipment and systems, finance, sales and marketing resources, and management issues. For example, difficulty in recruiting skilled workers, lack of space to add production capacity, lack of short-term working capital, underperforming sales members, and management conflict are respective examples of these categories of weakness. But even more crucial to determine is which of these, in relation to the competition, is a potentially ‘lethal’ element to growing your company in relation to the competition. All companies have weaknesses and what matters is which weakness, in relation to the competition, is going to undermine your competitive advantage. While your company may need improvement in recruiting skilled workers, maybe your competition is even worse at it… which could be an opportunity for you!

Take the time to do this analysis very carefully and thoroughly because it can make a huge difference in the strategy that you develop.

Next week we will talk about the step most owners enjoy a lot more than defining their company’s weakness:  identifying the opportunities.

QUESTION:  If you had all the resources to gain market share, where would you be going after it?