Hunt For Business: Grow Now or Be Eaten!
Six proven management methods to grow your business.
Are you using your gut feelings or business guesses to reach the revenue goals you have for your company? Is your current growth business model aligned with a pre-mediated growth model or market demand model? If not, you may soon be trying to sell red shoes to blue shoe buyers.
In today's hyper competitive market you must continually strive to grow your business now or you will be eaten later. Sustainable year over year growth for any product or professional service business is a continuous challenge for management teams who are seeking to expand their business. But if it is implemented correctly, it becomes a planned process not a reactive result.
Successful business expansion is tied to the market model you select, the economic model you operate in, the market gap you have identified and fill and its correct alignment with one of the four growth cycles your company currently selects. A study was conducted of growth models in more than 1,000 companies during the last five years that identified six primary models for business growth and 14 secondary models that can be deployed to increase corporate revenue. Each of these models has both positive and negative attributes that have to be managed. Additionally, each one of the primary approaches can be applied to more than one product or service you sell within the same company using a best practices approach to benchmark your success.
The key to growing your business is based on a two step process that includes: A) determining the market gap for what you sell and B) selecting a growth model that fits your needs.
Step 1- Identify the Market Gap
What Is Market Gap Analysis?
Market Gap Analysis focuses on using a systematic research approach to
discover and uncover sales opportunities where market demand is greater
than supply. Through the deployment of Market Gap Analysis, your
organization can make logical, strategic and tactical decisions based
on market facts, not subjective opinion. Market Gap Analysis is a
proactive approach to meet identified market demand.
How Is Market Gap Analysis Different From Market Research?
Market Research focuses on the investigation and analysis of known
business model characteristics including sales, marketing, distribution
and deployment techniques. It does not identify new markets where
demand is greater than supply and it is a reactive approach to help
understand how you position, sell and distribute products and services
into an existing market where demand is already determined (or
perceived to be determined).
Why Should Your Company Use Market Gap Analysis?
The key to successful top line revenue growth is to identify a demand
that is unfulfilled and then create (or acquire) professional services
or products that you can sell to fill this un-serviced gap. Many
companies have never done market gap analysis and in fact, they are
currently failing to grow their business due to this fact.
Traditionally, companies use three methods to forecast growth demand
which include:
- The percentage rule of market research
method to determine revenue growth opportunities. (Take the national
market statistics of an industry and/or the geography you sell into and
assume that you will sell a percentage of the total market -3 percent
of the red shoe market in Boston).
- Market demand based on their own personal experiences.
- Lastly, some business principals believe the offering they have created is so great, it will just have buyers (This method is oftentimes associated with the founder's pride or ego).
In all of these examples, a firm may actually achieve some increase (a false positive gap) in growth that ultimately misguides management even further to increase their investment based on their early success. Yet, ultimately as they try to expand their business, they fail and do not understand why.
When Should A Growth Directed Firm Use Market Gap Analysis?
A Market Gap Analysis should be used when the firm is:
-
Looking to forecast and confirm demand for an existing product or service
- Seeking to enter a new business vertical or industry
- Trying to decide on the investment needed to expand a buyer offering
- Seeking to merge or acquire another firm
- Deciding to launch a new product or service business.
Growth Step 2 - Pick Your Growth Model
There are many different ways that you can go about doing Market Gap Analysis, but there are six particularly ways that are very effective. In order to make your business more successful, it is a very good idea to determine whether a market gap exists and if it does, decide which growth model you wish to emulate.
Market Growth Options You Can Use
- Market Duplication - This model focuses on paralleling your product or service offering's pricing, features and business program based on your direct competitor's business model.
- Market Variation - This model is based on the competition's model, but adjusts it to visibly offer potential customers some improvement in product, feature and price or its distribution approach.
- Market Symbiotic Attachment - This model is used by companies whose revenue streams are connected directly to the success or failure of other vendors or partners they work with and is often seen with channel partners, wholesalers, franchisees and licensee relationships. If your linked relationship fails - so can you.
- Market Consolidation - This model uses a growth process where companies buy-up or roll-up revenue by buying competitors or complementary product or service companies and their market share without using internal organic growth techniques to grow revenue by selling new prospects on their own.
- Market Innovation - This business growth strategy takes market variation a step further. Instead of a single market variation on a product or service offering, this model creates a new market paradigm that changes how your target buyers see the product or service you sell from a totally new positioning light. Often, market innovation growth models can evolve into a Market Entrepreneurial Launch direction.
- Market Entrepreneurial Launch - This model of growth happens when companies use market gap analysis and identify new opportunities where market demand is greater than supply and where they create a whole new market or industry and are first to exploit this gap.
It is common for businesses that are growth directed to have several products and services each with different growth options connected to them. But based on research, to be successful, there is usually one dominant business growth attribute that has secondary influences on how the firm deploys its growth model. Each one of these six growth options can be used to increase your firm's revenue on a whole or just for a targeted product or service by itself.
Paul DiModica is president of DigitalHatch (Peachtree City, GA), a management consulting company focused on value forward sales, marketing, and management strategies. He is the author of the best-selling book, Value Forward Selling: How To Sell Management, the new book Sales Management Power Strategies and publisher of the world's largest sales strategy newsletter called BDM News. Paul has more than 20 years experience at the VP level in the areas of sales, marketing and operations. For more information about Paul's speaking and consulting work, visit >www.pauldimodica.com/index.html
